Charitable Giving

March 13, 2024

9073 / What are the tax consequences of a charitable contribution of partnership interests?

<div class="Section1">A partnership interest is a capital asset that, if sold, would be given capital gain or loss treatment except to the extent of the partner’s share of certain partnership property that, if sold by the partnership, would produce ordinary gain (i.e., the partner’s share of “unrealized receivables” and “substantially appreciated inventory”).<a href="#_ftn1" name="_ftnref1">1</a> (See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8605">8605</a> and Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8606">8606</a> regarding the treatment of capital gains and losses.) Thus, if a taxpayer makes a charitable contribution of a partnership interest, and if the taxpayer has held the interest for long enough to qualify for long-term capital gain treatment (i.e., more than one year, see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8625">8625</a>), a deduction is permitted in the amount of the full fair market value of the interest less the amount of ordinary gain, if any, that would have been realized by the partnership for the partnership’s share of “unrealized receivables” and “substantially appreciated inventory.” (The deduction is subject to the otherwise applicable limits discussed in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9065">9065</a>.)<div class="Section1"> If the partnership interest includes a liability (mortgage, etc.), the amount of the liability is treated as an amount realized on the disposition of the partnership interest.<a href="#_ftn2" name="_ftnref2">2</a> Thus, the contribution is subject to the bargain sale rules, and the transfer will be treated, in part at least, as a sale (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9069">9069</a>).<a href="#_ftn3" name="_ftnref3">3</a> (If the partner’s share of the partnership liabilities exceeds the fair market value of his partnership interest, the partner may have taxable income, but no deduction under the bargain sale rules.) In Goodman v. United States,<a href="#_ftn4" name="_ftnref4">4</a> the taxpayer contributed her partnership interest to charity, subject to her share of partnership debt. The district court held that the taxpayer recognized gain on the transfer that was equal to the excess of the amount realized over that portion of the adjusted basis of the partnership interest (at the time of the transfer) allocable to the sale under IRC Section 1011(b).<a href="#_ftn5" name="_ftnref5">5</a> The following steps must be taken to determine the taxpayer’s taxable income and the amount of the charitable deduction under the bargain sale rules: <ol> <li>Determine the taxable gain on the sale portion. Under the bargain sale rules, part of the donor’s basis is allocated to the portion sold. The basis allocated to the sold portion is the amount of basis that bears the same ratio to the entire basis as the amount realized bears to the market value of the property. Presumably, the sold portion includes the same proportionate part of the donor’s share of unrealized receivables and substantially appreciated inventory as it does basis.</li> </ol> <blockquote>Example: Adam owns a 10 percent interest in a partnership that he has held for three years. The fair market value of his interest is $100,000 and his adjusted basis is $50,000. His share of a mortgage on partnership property is $40,000, and his share of “unrealized receivables” (potential depreciation recapture on the mortgaged property) is $5,000 in which the partnership’s basis is zero. He donates his entire interest to charity. He is deemed to have received $40,000, his share of partnership liabilities, on the transfer. In effect there are two transactions–a sale for $40,000 and a contribution of $60,000. Of Adam’s $50,000 basis in his partnership interest, $20,000 is allocated to the sale portion: $40,000 (amount realized)/$100,000 (fair market value) × $50,000 (total adjusted basis). The fair market value of the sold portion is $40,000 (amount realized). Adam must recognize a gain of $20,000 ($40,000 realized less $20,000 adjusted basis allocated to the sold portion). Of that gain, $2,000 is allocable to unrealized receivables ($5,000 unrealized receivables × $40,000/$100,000). Because the partnership has no basis in the unrealized receivables, the entire $2,000 would be ordinary income. Adam must report a taxable long-term capital gain of $18,000 and a taxable ordinary gain of $2,000.</blockquote> <ol start="2"> <li>Determine the charitable contribution deduction. Generally, the fair market value of the portion given to charity is deductible except to the extent the property would have generated ordinary income if sold. Consequently, the allowable deduction for the gift portion must be reduced to the extent the portion of the partnership interest given to the charity would produce ordinary income if sold.</li> </ol> <blockquote>Example: The fair market value of Adam’s gift to charity is $60,000. Because 60 percent of the partnership interest was given to the charity ($60,000/$100,000), 60 percent of Adam’s share of partnership “unrealized receivables,” or $3,000 ($5,000 × 60 percent = $3,000), is considered included in the gift. The balance of the gift would be long-term capital gain on sale. Because $3,000 would be ordinary income on a sale, Adam’s contribution is reduced by $3,000, and his charitable contribution deduction is $57,000.</blockquote> Other special rules may apply under certain circumstances, for example, if the partnership owns property subject to tax credit recapture, if it has made installment sales, or (as might occur in the case of an oil and gas partnership) if it is receiving income in the form of “production payments.” </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 741. <a href="#_ftnref2" name="_ftn2">2</a>.  Treas. Reg. § 1.1001-2. See Crane v. Comm., 331 U.S. 1 (1947). <a href="#_ftnref3" name="_ftn3">3</a>.  Rev. Rul. 75-194, 1975-1 CB 80. <a href="#_ftnref4" name="_ftn4">4</a>.  2000-1 USTC ¶ 50,162 (S.D. Fl. 1999). <a href="#_ftnref5" name="_ftn5">5</a>.  Citing Rev. Rul. 75-194 and Treas. Reg. § 1.1001-2. </div></div>

March 13, 2024

9067 / Can an individual deduct the fair market value of appreciated real estate or intangible personal property such as stocks or bonds given to a charity?

<div class="Section1">If an individual makes a charitable contribution of real property or intangible personal property to a public charity, the sale of which would have resulted in long-term capital gain (see below), the taxpayer is generally entitled to deduct the full fair market value of the property. However, the deduction for the gift is limited to the lesser of 30 percent of adjusted gross income or the unused portion of the 60 percent limit (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9065">9065</a>).<a href="#_ftn1" name="_ftnref1">1</a><div class="Section1"> A deduction denied because it exceeds 30 percent of the individual’s adjusted gross income may be carried over and treated as a contribution of capital gain property in each of the next five years.<a href="#_ftn2" name="_ftnref2">2</a> <blockquote>Example: In 2022, Jaclyn had adjusted gross income of $600,000. She made a charitable contribution of long-term capital gain stock worth $200,000 to her church. Her deduction is limited to $180,000 (30 percent of $600,000). In 2023, Jaclyn’s adjusted gross income is $700,000. She contributes $100,000 worth of long-term capital gain bonds to the church. She may deduct $120,000 in 2023 ($100,000 plus $20,000 carried forward from 2022), since the total does not exceed 30 percent of her adjusted gross income for 2023 ($210,000).</blockquote> An individual may elect to take a gift of long-term capital gain property into account at its adjusted basis instead of its fair market value. If the taxpayer makes this election, the income percentage limit for the contribution is increased to 60 percent instead of 30 percent. However, such an election applies to all such contributions made during the taxable year.<a href="#_ftn3" name="_ftnref3">3</a> The election is generally irrevocable.<a href="#_ftn4" name="_ftnref4">4</a> If the charitable contribution consists of property that, if sold at the time of the contribution, would result in income that would not otherwise qualify for long-term capital gain treatment (such as short-term capital gain property), the deduction must be reduced by the amount of gain that would not be long-term capital gain.<a href="#_ftn5" name="_ftnref5">5</a> If the entire gain would be income other than long-term capital gain, the allowable deduction would be limited to the taxpayer’s adjusted basis in the contributed property. Special rules apply to charitable contributions of S corporation stock in determining whether gain on the stock would have been long-term capital gain if the stock were sold by the taxpayer.<a href="#_ftn6" name="_ftnref6">6</a> Donors making charitable contributions of the long-term capital gain portion of futures contracts must mark the contracts to market as of the dates the contracts are transferred to the donee and recognize the accrued long-term capital gains as income.<a href="#_ftn7" name="_ftnref7">7</a> The amount of taxable gain or deductible loss recognized by the transferor at the time of the charitable transfer equals the difference between the fair market value of the futures contract at the time of the transfer and the transferor’s tax basis in the futures contract, as adjusted under IRC Section 1256(a)(2), to account for gains and losses already recognized in prior tax years under the mark to market rules.<a href="#_ftn8" name="_ftnref8">8</a> In one case, taxpayers who transferred appreciated stock to charitable organizations in the midst of an ongoing tender offer and merger were taxed on the gain on the stock under the “anticipatory assignment of income doctrine” where the charitable gifts occurred after the taxpayers’ interests in a corporation had ripened into rights to receive cash.<a href="#_ftn9" name="_ftnref9">9</a> But where taxpayers assigned warrants to four charities after receiving a letter announcing that all issued and outstanding stock of the company would be purchased, the Tax Court held that under Revenue Ruling 78-197<a href="#_ftn10" name="_ftnref10">10</a> the IRS could treat the proceeds of the sales of the warrants by the charities as income to the donors only if at the time the assignments took place, the charitable donees were legally bound or could be compelled to sell the warrants.<a href="#_ftn11" name="_ftnref11">11</a> A taxpayer who donated stock to a supporting organization where the voting rights had been transferred for a business purpose to a third party many years ago was permitted to claim a charitable deduction.<a href="#_ftn12" name="_ftnref12">12</a> </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  See IRC § 170(b)(1)(C); Treas. Reg. § 1.170A-8(d)(1). <a href="#_ftnref2" name="_ftn2">2</a>.  IRC §§ 170(b)(1)(C); Treas. Reg. § 1.170A-10(c). <a href="#_ftnref3" name="_ftn3">3</a>.  IRC §§ 170(b)(1)(C)(iii), 170(e)(1). <a href="#_ftnref4" name="_ftn4">4</a>.  Woodbury v. Comm., 90-1 USTC ¶ 50,199 (10th Cir. 1990), aff’g TC Memo 1988-272. <a href="#_ftnref5" name="_ftn5">5</a>.  IRC § 170(e)(1)(A); Treas. Reg. § 1.170A-4(a). <a href="#_ftnref6" name="_ftn6">6</a>.  IRC § 170(e)(1). <a href="#_ftnref7" name="_ftn7">7</a>.  Greene v. U.S., 79 F.3d 1348 (2d Cir. 1996). <a href="#_ftnref8" name="_ftn8">8</a>.  Greene v. U.S., 185 F.3d 67, 84 AFTR 2d 99-5415 (2d Cir. 1999). <a href="#_ftnref9" name="_ftn9">9</a>.  See Ferguson v. Comm., 174 F.3d 997 (9th Cir. 1999). <a href="#_ftnref10" name="_ftn10">10</a>.  1978-1 CB 83. <a href="#_ftnref11" name="_ftn11">11</a>.  Rauenhorst v. Comm., 119 TC 157 (2002). <a href="#_ftnref12" name="_ftn12">12</a>.  Let Rul. 200108012. </div></div>

March 13, 2024

9069 / How is the charitable contribution deduction computed when property is sold to a charity at a reduced price (in a "bargain sale")?

<div class="Section1">If property is sold to a charity for less than its fair market value (a bargain sale), the individual must first determine whether a charitable deduction is allowable under the general rules governing charitable deductions (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9059">9059</a>). The taxpayer must then determine the amounts of the allowable deduction and gain (if any) that will result from the transaction. The taxpayer first calculates the percentage of the property’s fair market value that is being contributed and what percentage is being sold. (The fair market value of the contributed portion is the fair market value of the entire property less the amount realized on the sale.<a href="#_ftn1" name="_ftnref1">1</a> The fair market value of the portion sold is the amount realized on the sale.)<div class="Section1"> To determine the permissibility and the amount of the deduction for the contributed portion, the value of the contributed portion must be reduced by any gain that would not have been realized as long-term capital gain had the contributed portion been sold, taking into account the basis allocated to it.<a href="#_ftn2" name="_ftnref2">2</a> If the sale of the contributed portion by the donor would have resulted in long-term capital gain (see example 2, below), no reduction is required unless the gift is tangible personal property and the use of the gift will be unrelated to the function of the charity.<a href="#_ftn3" name="_ftnref3">3</a> After any such reduction required by IRC Section 170(e)(1) has been made, the remaining amount of the contribution is the allowable deduction. The taxpayer’s adjusted basis in the property is then allocated to each portion in these proportions.<a href="#_ftn4" name="_ftnref4">4</a> It is allocated between the portions contributed and sold, based on their relative proportions of the property’s fair market value.<a href="#_ftn5" name="_ftnref5">5</a> Gain is recognized on the sale portion to the extent the amount realized exceeds the allocated basis. However, no loss is recognized if the sale amount is less than the allocated basis of the sold portion.<a href="#_ftn6" name="_ftnref6">6</a> The amount of the deduction for the contributed portion is determined as if property having the allocated basis and allocated fair market value were given. The end result of this analysis is that essentially two separate transactions take place: (1) a sale of property that may result in taxable income, and (2) a deductible contribution of property to the charity. In some cases, the application of these rules may result in a taxable gain in excess of the allowed deduction. If the property is subject to a liability, the amount of the liability is treated as an amount realized.<a href="#_ftn7" name="_ftnref7">7</a> <blockquote>Example 1. Dale sells ordinary income property to his church for $4,000, which is the amount of his adjusted basis. The property has a fair market value of $10,000. The contribution portion of the transaction has a value of $6,000 ($10,000 fair market value less $4,000 amount realized) that represents 60 percent of the value of the property. The amount realized represents 40 percent of the value of the property ($4,000/$10,000). The adjusted basis ($4,000) is therefore allocated as follows: 40 percent of it ($1,600) becomes Dale’s basis in the “sold” portion and 60 percent of it ($2,400) becomes his basis in the “contributed” portion. The $6,000 “contribution portion” of the transaction has an allocated basis of $2,400. If it were sold, he would recognize $3,600 of ordinary income. The deduction for the $6,000 contribution is therefore reduced by $3,600. Dale has a charitable deduction of $2,400. Because Dale is receiving $4,000 for the “sold” portion and has an allocated basis in it of $1,600, he recognizes $2,400 of ordinary income with respect to the sale part of the transaction. The church’s basis in the property received will be $6,400; this consists of the sum of the bargain sale price ($4,000) and the amount of Dale’s basis ($2,400) in the gift portion.<a href="#_ftn8" name="_ftnref8">8</a> Example 2. The facts are the same as in Example 1, except that the property was long-term capital gain stock. Dale’s allocations of basis are the same as above; therefore, he recognizes $2,400 on the sale portion of the transaction. However the contributed portion is not subject to a reduction; thus, he is permitted a deduction of $6,000. The church’s basis in the stock will be $6,400, determined the same way as in Example 1.</blockquote> A taxpayer who makes charitable contributions of long-term capital gain property may elect to apply the provisions of IRC Section 170(e)(1) to all such contributions, thus using adjusted basis instead of fair market value to determine the value of the gifts. This election permits the individual to take a higher proportion of income as charitable deductions than would otherwise be allowed (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9065">9065</a>). In the context of a bargain sale, the Tax Court has found that the charitable deduction was properly claimed in the year that the sale was completed, because sufficient benefits and burdens of ownership had passed to the charitable organization in that year.<a href="#_ftn9" name="_ftnref9">9</a> Bargain sale treatment was denied to a taxpayer who inflated his valuation to a figure that would enable him to recover his original investment in his property (in the form of cash plus tax savings from the inflated tax deduction).<a href="#_ftn10" name="_ftnref10">10</a> </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  Treas. Reg. § 1.170A-4(c)(3). <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 170(e)(1)(A); Treas. Reg. § 1.1011-2(a). <a href="#_ftnref3" name="_ftn3">3</a>.  IRC § 170(e)(1)(B). <a href="#_ftnref4" name="_ftn4">4</a>.  IRC § 1011(b); Treas. Reg. §§ 1.170A-4(c)(2)(i), 1.1011-2. <a href="#_ftnref5" name="_ftn5">5</a>.  IRC §§ 170(e)(2), 1011(b); Treas. Reg. § 1.170A-4(c)(2). <a href="#_ftnref6" name="_ftn6">6</a>.  Treas. Reg. § 1.1001-1(e). <a href="#_ftnref7" name="_ftn7">7</a>.  Treas. Reg. § 1.1011-2(a)(3). <a href="#_ftnref8" name="_ftn8">8</a>.  Treas. Reg. § 1.170A-4(d), Example 5. <a href="#_ftnref9" name="_ftn9">9</a>.  See Musgrave v. Comm., TC Memo 2000-285. <a href="#_ftnref10" name="_ftn10">10</a>.  Styron v. Comm., TC Summ. Op. 2001-64. </div></div>

March 13, 2024

9071 / Can a deduction be taken for a charitable contribution of less than the donor's entire interest in property?

<div class="Section1">Usually not. Generally, a taxpayer may not deduct a charitable contribution that is less than the entire interest in property unless the contribution is made in trust. (A deduction of a partial interest will be allowed to the extent a deduction would be allowed if the interest had been transferred in trust.<a href="#_ftn1" name="_ftnref1">1</a>) However, a taxpayer may deduct contributions of partial interests if they are made to each of several charities, with the result that the entire interest in the property has been given to charitable organizations. An individual may make a gift of a partial interest in property if that is the individual's entire interest, but not if partial interests were created to avoid the application of the rule prohibiting gifts of less than the individual's entire interest.<a href="#_ftn2" name="_ftnref2">2</a></div> <div class="Section1"> Exceptions: A deduction is allowed for a contribution of less than the donor's entire interest in property in the following instances: <blockquote>(1) The taxpayer donates an irrevocable remainder interest in a personal residence or farm;<a href="#_ftn3" name="_ftnref3">3</a> (2) The taxpayer makes a qualified conservation contribution;<a href="#_ftn4" name="_ftnref4">4</a> or (3) The taxpayer donates an undivided portion of his entire interest.<a href="#_ftn5" name="_ftnref5">5</a> An undivided portion is a fraction or percentage of each and every substantial interest or right owned by the donor in property and the fraction or percentage extends over the entire term of the donor's interest in the property and in other property into which that property is converted.<a href="#_ftn6" name="_ftnref6">6</a> The right to possession of an undivided portion of the taxpayer's entire interest has been held sufficient to constitute a charitable gift, even where the donee did not actually choose to take possession.<a href="#_ftn7" name="_ftnref7">7</a> The possibility that a charity's undivided fractional interest may be divested upon the occurrence or nonoccurrence of some event has been determined not to defeat an otherwise deductible contribution where the possibility is deemed so remote as to be negligible.<a href="#_ftn8" name="_ftnref8">8</a></blockquote> The IRS has also found that a charitable gift of an "overriding royalty interest" or a "net profits interest" in an oil and gas lease did not constitute an undivided portion of the donor's entire interest in an oil and gas lease where the donor owned a working interest under the lease.<a href="#_ftn9" name="_ftnref9">9</a> The IRS has ruled privately that a donor's transfer of a life insurance policy to a charity, where the donor retained bare legal title, was not a retention of a substantial interest for purposes of the partial interest rule. Thus, the donor did not violate the partial interest rule, and was allowed to claim the charitable contribution deduction on the first day following the end of the 30-day cancellation period.<a href="#_ftn10" name="_ftnref10">10</a> In a case involving the contribution of a patent to a qualified charity, the IRS found that no deduction is allowed if: (1) the taxpayer retains any substantial right in the patent; or (2) the taxpayer's contribution of a patent is subject to a conditional reversion, unless the likelihood of the reversion is so remote as to be negligible. On the other hand, a contribution of a patent subject to a license or transfer restriction will be deductible, but the restriction reduces what would otherwise be the fair market value of the patent at the time of the contribution and, therefore, reduces the amount of the charitable contribution.<a href="#_ftn11" name="_ftnref11">11</a> A charitable deduction is not allowed for a contribution of an undivided portion of the donor's entire interest in tangible personal property unless, before the contribution, all interests in the property were held by the donor or the donor and the charity. In the case of any additional contribution of interests in the same property, the fair market value (FMV) of such contributions will be equal to the lesser of (1) the FMV at the time of the initial fractional contribution, or (2) the FMV at the time of the additional contribution.<a href="#_ftn12" name="_ftnref12">12</a> <blockquote>Example. Mark contributed 10 percent of a painting valued at $100,000 to an art museum in 2024 (a related use gift). The charitable deduction for the 10 percent interest was $10,000 in 2024. In 2025, Mark contributes another 10 percent interest in the painting to the art museum when the painting is valued at $110,000. However, for charitable deduction purposes, the fair market value of the painting cannot exceed the $100,000 value at the time of the initial contribution. Therefore, the charitable deduction is limited to $10,000 (10 percent of $100,000) in 2024.</blockquote> The charitable deduction for a contribution of an undivided portion of the donor's entire interest in tangible personal property is recaptured (plus interest) if the donor does not contribute all of the remaining interests in the property to charity within 10 years of the initial fractional contribution or before death, whichever is earlier. Recapture is also required if the charity did not have substantial physical possession or make related use of the property during that period. The income tax on the recaptured amount is increased by 10 percent of the amount recaptured.<a href="#_ftn13" name="_ftnref13">13</a> </div> <div class="refs"> <hr align="left" size="1" width="33%" /> <a href="#_ftnref1" name="_ftn1">1</a>. IRC § 170(f)(3)(A); Treas. Reg. § 1.170A-7(a). <a href="#_ftnref2" name="_ftn2">2</a>. Treas. Reg. § 1.170A-7(a)(2)(i). <a href="#_ftnref3" name="_ftn3">3</a>. IRC § 170(f)(3)(B)(i); Treas. Reg. §§ 1.170A-7(b)(3), 1.170A-7(b)(4). <a href="#_ftnref4" name="_ftn4">4</a>. IRC § 170(f)(3)(B)(iii). <a href="#_ftnref5" name="_ftn5">5</a>. IRC § 170(f)(3)(B)(ii). <a href="#_ftnref6" name="_ftn6">6</a>. Treas. Reg. § 1.170A-7(b)(1). See Rev. Rul. 57-293, 1957-2 CB 153 (undivided ¼ ownership and ¼ possession of art object); Rev. Rul. 72-419, 1972-2 CB 104 (undivided 20 percent remainder interest which was the donor's only interest in the property). See also See Let. Ruls. 8145055, 8639019. <a href="#_ftnref7" name="_ftn7">7</a>. See Winokur v. Comm., 90 TC 733 (1988), acq. 1989-1 CB 1. See also Let. Ruls. 200223013, 200223014 (the gift of a fractional interest in any work of the donors' collection accepted by the donee (subject to the gift and loan agreement) would qualify as a gift of an undivided portion of the donors' entire interest in the work, relying on Winokur, above; thus, the undivided fractional interest would be deductible). <a href="#_ftnref8" name="_ftn8">8</a>. Let. Rul. 9303007. <a href="#_ftnref9" name="_ftn9">9</a>. Rev. Rul. 88-37, 1988-1 CB 522. <a href="#_ftnref10" name="_ftn10">10</a>. Let. Rul. 200209020. <a href="#_ftnref11" name="_ftn11">11</a>. Rev. Rul. 2003-28, 2003-1 CB 594. <a href="#_ftnref12" name="_ftn12">12</a>. IRC § 170(o), as added by PPA 2006. <a href="#_ftnref13" name="_ftn13">13</a>. IRC § 170(o)(3)(B). </div>

March 13, 2024

9066 / When is the deduction for charitable donations taken?

<div class="Section1">Generally, the deduction for a contribution is taken in the year the gift is made.<a href="#_ftn1" name="_ftnref1">1</a> However, if the contribution is a future interest in tangible personal property (such as stamps, artwork, etc.), the contribution is considered made (and the deduction allowable) only “when all intervening interests in, and rights to the actual possession or enjoyment of, the property have expired” or are held by parties unrelated to the donor.<a href="#_ftn2" name="_ftnref2">2</a><div class="Section1"> <blockquote>Example: If a donor creates a charitable remainder trust and funds it with a piece of artwork, the donor may not take a charitable income tax deduction for the contribution to the charitable remainder trust until the year the trustee sells the artwork.</blockquote> This rule does not apply to gifts of undivided present interests, or to gifts of future interests in real property or in intangible personal property.<a href="#_ftn3" name="_ftnref3">3</a> A grant of stock options by a company to a charitable trust resulted in a deduction in the year in which the options were exercised.<a href="#_ftn4" name="_ftnref4">4</a> Where real estate was transferred to a charity and subject to an option to repurchase, the IRS determined that fair market value under IRC Section 170 was equal to the value of the property upon the expiration of the option.<a href="#_ftn5" name="_ftnref5">5</a> A fixture that is to be severed from real property is treated as tangible personal property.<a href="#_ftn6" name="_ftnref6">6</a> The deduction for a charitable contribution made by an accrual basis (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9045">9045</a>) S corporation is properly passed through to shareholders and taken in the year that the contribution is actually paid.<a href="#_ftn7" name="_ftnref7">7</a> See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9071">9071</a> for an explanation of the treatment given to gifts of partial interests. </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 170(a)(1). <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 170(a)(3). See also Treas. Reg. § 1.170A-5. <a href="#_ftnref3" name="_ftn3">3</a>.  Treas. Reg. §§ 1.170A-5(a)(2), 1.170A-5(a)(3). <a href="#_ftnref4" name="_ftn4">4</a>.  Let. Ruls. 200202034, 8849018. <a href="#_ftnref5" name="_ftn5">5</a>.  TAM 9828001. <a href="#_ftnref6" name="_ftn6">6</a>.  IRC § 170(a)(3). <a href="#_ftnref7" name="_ftn7">7</a>.  TAM 200004001. See also Rev. Rul. 2000-43, 2000-2 CB 333. </div></div>

March 13, 2024

9068 / Is a charitable deduction available for the donation of appreciated tangible personal property, such as art, stamps, coins and gems?

<div class="Section1">It depends upon whether the use of the gift is related to the exempt purpose of the charity to which the property is given. Generally, if the sale of appreciated tangible personal property would result in long-term capital gain (see below), a taxpayer is entitled to deduct the property’s full fair market value up to 30 percent of the individual’s adjusted gross income, if the charity makes use of the property in a way that is related to its charitable purpose or function (i.e., it is a “related-use” gift).<a href="#_ftn1" name="_ftnref1">1</a> The limit is generally 20 percent in the case of private foundations. However, if the use by the charity is unrelated to its charitable purpose or function, the amount of the charitable contribution taken into account is generally limited to the donor’s adjusted basis in the donated property.<a href="#_ftn2" name="_ftnref2">2</a><div class="Section1"> The following example illustrates the meaning of “unrelated use”: “[I]f a painting contributed to an educational institution is used by that organization for educational purposes by being placed in its library for display and study by art students, the use is not an unrelated use; but if the painting is sold and the proceeds used by the organization for educational purposes, the use of the property is an unrelated use.” In addition, the regulations state that contributions of furnishings used by the charitable organization in its offices and buildings in the course of carrying out its functions will be considered a related use gift.<a href="#_ftn3" name="_ftnref3">3</a> <hr> Planning Point: The charitable organization will state on IRS Form 8283, Part IV (which the donor provides to the IRS as part of the donor’s income tax return) whether it intends to use the item for an unrelated use. <hr> The IRS has determined that a gift of seeds, plants, and greenhouses to an IRC Section 501(c)(3) school’s plant science curriculum was a related use gift, and that a gift of a violin to a charitable organization whose exempt purpose included loaning instruments to music students was a related use gift.<a href="#_ftn4" name="_ftnref4">4</a> The IRS has also found that contributions of art to a Jewish community center for use in the center’s recreational, educational, and social activities were related use gifts.<a href="#_ftn5" name="_ftnref5">5</a> If the taxpayer contributes long-term capital gain “related use” property to public charities, the taxpayer may elect to value the gift at its adjusted basis instead of its fair market value. If this election is made, the 30 percent of adjusted gross income limit does not apply. Instead, the donor may deduct the amount of his adjusted basis in the gift, up to 60 percent of adjusted gross income. If the taxpayer makes the election, it applies to all gifts of long-term capital gain property during the year.<a href="#_ftn6" name="_ftnref6">6</a> Such an election is generally irrevocable.<a href="#_ftn7" name="_ftnref7">7</a> <hr> Planning Point: The CARES Act lifted the 60 percent AGI limit for 2020 contributions. This relief was also extended through 2021. <hr> The amount of the deduction for a contribution of tangible personal property must be reduced by the amount of gain that would not be long-term capital gain (gain on a capital asset held for more than one year, see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8625">8625</a>) if the contributed property had been sold at its fair market value at the time of the contribution. Thus, for example, if the entire gain would be ordinary income, the allowable deduction would be limited to the taxpayer’s adjusted basis in the contributed property. It makes no difference whether or not the property is put to a related use.<a href="#_ftn8" name="_ftnref8">8</a> Ordinary income property includes a work of art created by the donor.<a href="#_ftn9" name="_ftnref9">9</a> <hr> Planning Point: If an artist makes a charitable gift of the artist’s own artwork, the artist will only be able to deduct the costs of creating the art (e.g., paper, paint, etc.). <hr> The charitable deduction is recaptured by the donor on certain dispositions by the charity of tangible personal property identified by the charity as related use property for which a deduction in excess of basis was allowed. Unless the charity makes the appropriate certification, recapture applies if the charity disposes of the property after the taxable year the property was contributed, but before the end of the three-year period starting on the date of contribution (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9063">9063</a>). The certification must be in writing and signed under penalty of perjury by an officer of the charity. The written statement must (1) certify that the use of the property was related and describe the use of the property or (2) state the intended use at the time of contribution and certify that the intended use has become impossible or infeasible to implement. The amount recaptured (included in income) in the year of disposition is equal to the amount of the charitable deduction minus the donor’s basis in the property at the time of contribution.<a href="#_ftn10" name="_ftnref10">10</a> <blockquote>Example. Amy contributes a painting to an art museum in December 2024. The museum intends to display the painting. Amy claims a charitable deduction for the painting’s fair market value of $100,000 for 2024. Amy’s basis in the painting was $40,000. In 2025 (within three years of the contribution), the museum sells the painting. Amy must include $60,000 ($100,000 charitable deduction - $40,000 basis) in income in 2025.</blockquote> A charity is required to report any disposition of property (other than publicly traded securities) within three years after its receipt to the IRS, if the claimed value of the property (plus the claimed value of all similar items of property by the donor to one or more charities) exceeds $5,000. A copy of the related use certification (see above) must be included with this return.<a href="#_ftn11" name="_ftnref11">11</a> Any person who identifies tangible personal property as related use property and knows that the property is not intended for such use is subject to a $10,000 penalty.<a href="#_ftn12" name="_ftnref12">12</a> </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 170(b)(1)(C); Treas. Reg. § 1.170A-8(d)(1). <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 170(e)(1)(B). <a href="#_ftnref3" name="_ftn3">3</a>.  Treas. Reg. § 1.170A-4(b)(3)(i). <a href="#_ftnref4" name="_ftn4">4</a>.  Let. Ruls. 9131052, 9147049. <a href="#_ftnref5" name="_ftn5">5</a>.  Let. Rul. 9833011. <a href="#_ftnref6" name="_ftn6">6</a>.  IRC §§ 170(b)(1)(C)(iii), 170(e)(1). <a href="#_ftnref7" name="_ftn7">7</a>.  Woodbury v. Comm., 900 F.2d 1457, 90-1 USTC ¶ 50,199 (10th Cir. 1990), aff’g TC Memo 1988-272. <a href="#_ftnref8" name="_ftn8">8</a>.  See IRC § 170(e)(1)(A); Treas. Reg. § 1.170A-4(a). <a href="#_ftnref9" name="_ftn9">9</a>.  Treas. Reg. § 1.170A-4(b)(1). <a href="#_ftnref10" name="_ftn10">10</a>.  IRC § 170(e)(7), as added by PPA 2006. <a href="#_ftnref11" name="_ftn11">11</a>.  IRC § 6050L, as added by PPA 2006. <a href="#_ftnref12" name="_ftn12">12</a>.  IRC § 6720B, as added by PPA 2006. </div></div>

March 13, 2024

9065 / What are the income percentage limits for deductions of a charitable contribution?

<div class="Section1">Editor’s Note: The CARES Act made several changes designed to encourage charitable giving during the COVID-19 outbreak. For the 2020 and 2021 tax years, the CARES Act amended IRC Section 62(a), allowing taxpayers to reduce adjusted gross income (AGI) by $300 worth of charitable contributions even if they did not itemize. The CARES Act also lifted the 60 percent AGI limit, discussed below, for 2020 (this rule was also extended through 2021). Cash contributions to public charities and certain private foundations in 2020 and 2021 were not subject to an AGI limit. Individual taxpayers could offset their income for 2020 and 2021, up to the full amount of their AGI, and additional charitable contributions could be carried over to offset income in a later year (the amounts were not refundable). The corporate AGI limit was raised to 25 percent (excess contributions also carried over to subsequent tax years).<div class="Section1"> The amount of a taxpayer’s allowable deduction for charitable contributions will depend upon the taxpayer’s adjusted gross income (AGI), the type of asset donated, as well as the type of organization to which the donation is made. Further, the IRC distinguishes between gifts “to” a charitable organization and gifts “for the use of” a charitable organization (see below). 60 percent limit. Generally, an individual is allowed a charitable deduction of up to 60 percent (50 percent prior to 2018) of AGI for cash and certain other contributions (other than certain property, see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9068">9068</a>) to: churches, schools, hospitals or medical research organizations, groups that normally receive a substantial part of their support from federal, state, or local governments or from the general public and that aid any of the above organizations as well as federal, state, and local governments. Also included in this list is a limited category of private foundations (i.e., private operating foundations and conduit foundations)<a href="#_ftn1" name="_ftnref1">1</a> that generally direct their support to public charities. The above organizations are often referred to as “60 percent -type organizations.”<a href="#_ftn2" name="_ftnref2">2</a> 30 percent limit. The deduction for contributions of most long-term capital gain property to the above “60 percent-type organizations,” contributions for the use of any of the above organizations, as well as contributions (other than long-term capital gain property) to or for the use of any other types of charitable organizations (i.e., most private foundations) is limited to the lesser of (a) 30 percent of the taxpayer’s AGI, or (b) 60 percent of AGI minus the amount of charitable contributions allowed for contributions to the 60 percent-type charities.<a href="#_ftn3" name="_ftnref3">3</a> 20 percent limit. The deduction for contributions of long-term capital gain property to most private foundations is limited to the lesser of (a) 20 percent of the taxpayer’s AGI, or (b) 30 percent of AGI minus the amount of charitable contributions allowed for contributions to the 30 percent -type charities.<a href="#_ftn4" name="_ftnref4">4</a> Deductions denied because of the 60 percent, 30 percent, or 20 percent limits may be carried over and deducted over the next five years, retaining their character as 60 percent, 30 percent, or 20 percent type deductions.<a href="#_ftn5" name="_ftnref5">5</a> Gifts are “to” a charitable organization if made directly to the organization. Even though the gift may be intended to be used by the charity, and the charity may use it, if it is given directly to the charity, it is a gift to the charity and not “for the use of” the charity, for purposes of the deduction limits. Unreimbursed out-of-pocket expenses incurred on behalf of an organization (e.g., unreimbursed travel expenses of volunteers) are deductible as contributions “to” the organization if they are directly related to performing services for the organization (and, in the case of travel expenses, there is no significant element of personal pleasure, recreation, or vacation in such travel).<a href="#_ftn6" name="_ftnref6">6</a> “For the use of” applies to indirect contributions to a charitable organization.<a href="#_ftn7" name="_ftnref7">7</a> The term “for the use of” does not refer to a gift of the right to use property. Such a gift would generally be a nondeductible gift of less than the donor’s entire interest. See Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9072">9072</a> for a discussion of the permissible deduction when a taxpayer donates only the right to use property, rather than an ownership interest in such property. </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  See IRC § 170(b)(1)(E). <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 170(b)(1)(A). <a href="#_ftnref3" name="_ftn3">3</a>.  IRC §§ 170(b)(1)(B), 170(b)(1)(C). <a href="#_ftnref4" name="_ftn4">4</a>.  IRC § 170(b)(1)(D). <a href="#_ftnref5" name="_ftn5">5</a>.  IRC §§ 170(d)(1), 170(b)(1)(D)(ii); Treas. Reg. § 1.170A-10(b). <a href="#_ftnref6" name="_ftn6">6</a>.  IRC § 170(j); Rockefeller v. Comm., 676 F.2d 35 (2d Cir. 1982), aff’g 76 TC 178 (1981), acq. in part 1984-2 CB 2; Rev. Rul. 84-61, 1984-1 CB 39. See Rev. Rul. 58-279, 1958-1 CB 145. <a href="#_ftnref7" name="_ftn7">7</a>.  See Treas. Reg. § 1.170A-8(a)(2). See Davis v. United States, 495 U.S. 472 (1990). </div></div>

March 13, 2024

9070 / How is the amount of a charitable contribution determined when a taxpayer donates property subject to a mortgage or other debt?

<div class="Section1">When property subject to a liability, such as a mortgage or other debt, is contributed to a charity, the amount of the liability is treated as an amount realized, even if the charity does not assume or pay the debt.<a href="#_ftn1" name="_ftnref1">1</a> The property is considered sold for the amount realized, and the contribution is subject to the bargain sale rules (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9069">9069</a>).<div class="Section1"> If the charity assumes a liability or if property is donated that is subject to a liability, the amount of the charitable contribution may not include any interest paid (or to be paid) by the donor for any period after the contribution if the donor is allowed an interest deduction for the amount.<a href="#_ftn2" name="_ftnref2">2</a> If the property is a bond, the contribution must be reduced by the amount of interest paid by the taxpayer on indebtedness incurred to purchase or carry the bond that is attributable to any period before the making of the contribution. However, the amount of such a reduction is limited to the interest or interest equivalent (e.g., bond discount) on the bond that is not includable in the donor’s income.<a href="#_ftn3" name="_ftnref3">3</a> <blockquote>Example: (a) On January 1, 2013, Jen, an individual using the cash receipts and disbursements method of accounting, purchased for $9,280 a 5.5 percent, $10,000, 20-year Omega Corporation bond, the interest on which was payable semi-annually on June 30 and December 31. The Omega Corporation had issued the bond on January 1, 2013, at a discount of $720 from the principal amount. On December 1, 2023, Jen donated the bond to a charitable organization, and, in connection with the contribution, the charitable organization assumed an indebtedness of $7,000 that Jen had incurred to purchase and carry the bond. (b) During the 2023 calendar year, Jen paid accrued interest of $330 on the indebtedness for the period from January 1, 2023, to December 1, 2023, and an interest deduction of $330 is allowable for such amount. Of the bond discount of $36 a year ($720 divided by 20 years), $33 (11/12 of $36) is includable in Jen’s income. Of the $550 of annual interest receivable on the bond, she will include in income only the June 30, 2023, payment of $275. (c) The market value of the Omega Corporation bond on December 1, 2023, was $9,902. This value includes $229 of interest receivable that had accrued from July 1 to December 1, 2023. (d) The amount of the charitable contribution determined without regard to the reduction required by IRC Section 170(f)(5) is $2,902 ($9,902, the value of the property on the date of gift, less $7,000, the amount of the liability assumed by the charitable organization). In determining the amount of the allowable charitable deduction, the value of the gift ($2,902) must be reduced to eliminate from the deduction that portion for which Jen has been allowed an interest deduction. Although the amount of such interest deduction was $330, the reduction required by this section is limited to $229, since the reduction is not to exceed the amount of interest income on the bond that is not includable in Jen’s income.<a href="#_ftn4" name="_ftnref4">4</a></blockquote> </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  Treas. Reg. § 1.1001-2; Rev. Rul. 81-163, 1981-1 CB 433. See Let. Rul. 9329017; Guest v. Comm., 77 TC 9 (1981), acq. 1982-2 CB 1; Crane v. Comm., 331 U.S. 1 (1947). <a href="#_ftnref2" name="_ftn2">2</a>.  IRC § 170(f)(5); Treas. Reg. § 1.170A-3(a). <a href="#_ftnref3" name="_ftn3">3</a>.  IRC § 170(f)(5)(B); Treas. Reg. § 1.170A-3(c). <a href="#_ftnref4" name="_ftn4">4</a>.  Treas. Reg. § 1.170A-3(d), Example (2). </div></div>

March 13, 2024

9072 / What deduction is available when a taxpayer only grants the charity the right to use property, rather than donating an ownership interest in the property?

<div class="Section1">The right to use property is less than the entire interest in property owned by an individual and is subject to the rules governing a charitable contribution of less than the donor’s entire interest (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9071">9071</a>).<a href="#_ftn1" name="_ftnref1">1</a> Therefore, generally no deduction will be allowed.<div class="Section1"> <blockquote>Example: Stephen owns a beautiful vacation home on the beach. He typically rents it for $3,000 per week. He offers his favorite nonprofit the right to use his vacation homes for a week-long board retreat. Stephen is not, however, able to deduct $3,000 for the nonprofit’s use of the vacation home for the week.</blockquote> However, in some cases, a deduction has been allowed for the costs of repairing and maintaining property owned by the taxpayer but used by the charity. These deductions have been allowed as contributions “for the use of” the charity.<a href="#_ftn2" name="_ftnref2">2</a> Despite this, the IRS has denied a deduction for maintenance and repair costs in other situations.<a href="#_ftn3" name="_ftnref3">3</a> To be deductible, the costs must be unreimbursed expenses “directly attributable to the performance of … volunteer services.”<a href="#_ftn4" name="_ftnref4">4</a> A taxpayer was not permitted a deduction when he donated a week’s use of his vacation home in connection with a charitable auction, the proceeds of which benefitted charitable organizations. The IRS also noted that the successful bidder would not be permitted a charitable deduction to the extent that valuable consideration is received in return (i.e., the bidder paid fair rental for a week’s use of the home).<a href="#_ftn5" name="_ftnref5">5</a> Tenant-stockholders were allowed to exclude $500,000 of gain from the disposition of their shares of stock in a cooperative apartment which was coordinated with a donation of the same shares to a charitable organization.<a href="#_ftn6" name="_ftnref6">6</a> </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  IRC § 170(f)(3)(A). <a href="#_ftnref2" name="_ftn2">2</a>.  See Est. of Carroll v. Comm., 38 TC 868 (1962); Rev. Rul. 58-279, 1958-1 CB 145. <a href="#_ftnref3" name="_ftn3">3</a>.  Rev. Rul. 58-279, above; Rev. Rul. 69-239, 1969-1 CB 198. <a href="#_ftnref4" name="_ftn4">4</a>.  Rev. Rul. 58-279, above. <a href="#_ftnref5" name="_ftn5">5</a>.  Rev. Rul. 89-51, 1989-1 CB 89. <a href="#_ftnref6" name="_ftn6">6</a>.  See FSA 200149007. </div></div>

March 13, 2024

9060 / How is the value of property donated to charity determined?

<div class="Section1">Where property other than money is donated to charity, it is necessary to calculate the property’s fair market value in order to determine the amount of the allowable charitable deduction.<div class="Section1"> As in other circumstances, fair market value for this purpose is “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.”<a href="#_ftn1" name="_ftnref1">1</a> The willing buyer has often been viewed as a retail consumer, not a middleman.<a href="#_ftn2" name="_ftnref2">2</a> However, there are certain circumstances where the retail consumer is not the proper benchmark. For example, in the case of unset gemstones, the ultimate consumer is generally a jeweler engaged in incorporating the gems into jewelry. Therefore, the fair market value is based on the price that a jeweler would pay a wholesaler to acquire such stones.<a href="#_ftn3" name="_ftnref3">3</a> Often, taxpayers rely on expert appraisals in determining the fair market value of property.<a href="#_ftn4" name="_ftnref4">4</a> For some gifts to charity, an appraisal is required (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="9061">9061</a>). However, the value assigned by an appraiser is not always controlling and the IRS or the Tax Court may consider factors in addition to those considered by the taxpayer’s appraiser(s) which may reduce the value of the gift and, thus, the charitable deduction.<a href="#_ftn5" name="_ftnref5">5</a> The IRS has warned taxpayers that some promoters are likely to inflate the value of a charitable deduction for gemstones and lithographs, thus subjecting the taxpayer to higher taxes and possible penalties.<a href="#_ftn6" name="_ftnref6">6</a> Earlier case law has indicated that an auction price may be helpful in determining the value of art.<a href="#_ftn7" name="_ftnref7">7</a> The taxpayer claiming the charitable deduction has the burden of proof in establishing the fair market value of the property donated.<a href="#_ftn8" name="_ftnref8">8</a> Evidence of what an organization is willing to pay for copies of a manuscript may be used by the taxpayer as evidence of the value of the original manuscript, but it is not conclusive.<a href="#_ftn9" name="_ftnref9">9</a> Similarly, the price paid by a bankruptcy trustee may provide evidence of the fair market value, but in at least one case, the courts have found that the substantially higher value established by an appraiser was determinative of the property’s value.<a href="#_ftn10" name="_ftnref10">10</a> For property that is transferred to a charity and subject to an option to repurchase, fair market value under IRC Section 170 is the value of the property upon the expiration of the option.<a href="#_ftn11" name="_ftnref11">11</a> Guidelines for valuing property generally can be found in Revenue Procedure 66-49,<a href="#_ftn12" name="_ftnref12">12</a> and Announcement 2001-22.<a href="#_ftn13" name="_ftnref13">13</a> See also Crocker v. Commissioner<a href="#_ftn14" name="_ftnref14">14</a> (describing the three methods of determining fair market value of commercial real estate: (1) the replacement method, (2) the comparable sales method, and (3) the income capitalization method). <hr> Planning Point: The fair market value of publicly traded securities is equal to the average value of the high and low stock values on the date of delivery of the stock multiplied by the number of shares given to charity. The date of delivery depends on how the stock was delivered: hand delivered, mailed or electronically transferred. <hr> A taxpayer is not entitled to a charitable deduction for a contribution of clothing or a household item unless the property is in good used condition or better. A deduction for a contribution of clothing or a household item may be denied in circumstances where the donated item has minimal monetary value. These rules do not apply to a contribution of a single item if a deduction of more than $500 is claimed and a qualified appraisal is included with the return. Household items include furniture, furnishings, electronics, linens, appliances, and similar items; but not food, art, jewelry, and collections.<a href="#_ftn15" name="_ftnref15">15</a> <hr> Planning Point: It is a good idea to take photographs of household items prior to donation to document that they are in good used condition or better. <hr> Intellectual property. The American Jobs Creation Act of 2004 (AJCA 2004) provides strict rules for charitable donations of patents and intellectual property.<a href="#_ftn16" name="_ftnref16">16</a> For the temporary regulations providing guidance for the filing of information returns by donees relating to qualified intellectual property contributions, see Temporary Treasury Regulation Section 1.6050L-2T; TD 9206;<a href="#_ftn17" name="_ftnref17">17</a> and Announcement 2005-49.<a href="#_ftn18" name="_ftnref18">18</a> </div><div class="refs"> <hr align="left" size="1" width="33%"> <a href="#_ftnref1" name="_ftn1">1</a>.  Treas. Reg. § 1.170A-1(c); Rev. Rul. 68-69, 1968-1 CB 80. <a href="#_ftnref2" name="_ftn2">2</a>.  See Goldman v. Comm., 388 F.2d 476 (6th Cir. 1967). <a href="#_ftnref3" name="_ftn3">3</a>.  Anselmo v. Comm., 80 TC 872 (1983), aff’d, 757 F.2d 1208 (11th Cir. 1985). <a href="#_ftnref4" name="_ftn4">4</a>.  See Tripp v. Comm., 337 F.2d 432 (7th Cir. 1964); Est. of DeBie v. Comm., 56 TC 876 (1971), acq. 1972-2 CB 1 and 1972-2 CB 2. <a href="#_ftnref5" name="_ftn5">5</a>.  See Williford v. Comm., TC Memo 1992-450 (involving oversized artwork); Doherty v. Comm., TC Memo 1992-98 (involving artwork of questionable quality and authenticity); Arbini v. Comm., TC Memo 2001-141 (involving newspapers and holding that the appropriate market for purposes of determining the fair market value of the newspapers is the wholesale market). <a href="#_ftnref6" name="_ftn6">6</a>.  IR 83-89. <a href="#_ftnref7" name="_ftn7">7</a>.  Mathias v. Comm., 50 TC 994 (1968), acq. 1969-2 CB xxiv. But see McGuire v. Comm., 44 TC 801 (1965), acq. in result 1966-2 CB 6. <a href="#_ftnref8" name="_ftn8">8</a>.  See Weil v. Comm., TC Memo 1967-78; Schapiro v. Comm., TC Memo 1968-44. <a href="#_ftnref9" name="_ftn9">9</a>.  Barringer v. Comm., TC Memo 1972-234. See also Kerner v. Comm., TC Memo 1976-12. <a href="#_ftnref10" name="_ftn10">10</a>.  Herman v. U.S. and Brown v. U.S. (consolidated actions), 99-2 USTC ¶ 50,889 (E.D. Tenn. 1999). <a href="#_ftnref11" name="_ftn11">11</a>.  TAM 9828001. <a href="#_ftnref12" name="_ftn12">12</a>.  1966-2 CB 1257, as modified by Rev. Proc. 96-15, 1996-2 CB 627. <a href="#_ftnref13" name="_ftn13">13</a>.  2001-11 IRB 895. <a href="#_ftnref14" name="_ftn14">14</a>.  TC Memo 1998-204. <a href="#_ftnref15" name="_ftn15">15</a>.  IRC § 170(f)(16), as added by PPA 2006. <a href="#_ftnref16" name="_ftn16">16</a>.  See IRC §§ 170(e)(1)(B), 6050L; IRC § 170(m). See also Rev. Rul. 2003-28, 2003-11 IRB 594; Notice 2005-41, 2005-23 IRB 1203; Notice 2004-7, 2004-3 IRB 310; and IRS News Release IR-2003-141 (12-22-2003). <a href="#_ftnref17" name="_ftn17">17</a>.  70 Fed. Reg. 29450 (5-23-2005). <a href="#_ftnref18" name="_ftn18">18</a>.  2005-29 IRB 119. See also Notice 2005-41, 2005-23 IRB 1203. </div></div>