743 / What value of property contributed to charity can be considered for purposes of the charitable deduction if the gift is made to a private foundation?

Most private foundations are family foundations subject to restricted contribution limits. Certain other private foundations (i.e., conduit foundations and private operating foundations), which operate much like public charities, are treated as 50 (or 60) percent-type organizations (see Q 740).¹ The term “private foundations” as used under this heading refers to standard private (e.g., family) foundations.

The amount of the deduction for a contribution of appreciated property (tangible or intangible) contributed to or for the use of private foundations generally is limited to the donor’s adjusted basis; however, certain gifts of qualified appreciated stock made to a private foundation are deductible at their full fair market value.²

Qualified appreciated stock is generally publicly traded stock which, if sold on the date of contribution at its fair market value, would result in a long-term capital gain.³ Such a contribution will not constitute qualified appreciated stock to the extent that it exceeds 10 percent of the value of all outstanding stock of the corporation; family attribution rules apply in reaching the 10 percent level.⁴ The Service has determined that shares in a mutual fund can constitute qualified appreciated stock.⁵