Preface xv
Book Citations xxi
PART ONE Introduction to the Tax Law of Charitable Giving
1 Charitable Giving Law: Basic Concepts 3
§ 1.1 Introduction to the Charitable Contribution Deduction 3
§ 1.2 Defining Tax-Exempt Organizations 5
§ 1.3 Principles of Charitable Organizations Law Philosophy 8
§ 1.4 Statistical Profile of Charitable Sector 23
§ 1.5 Categories of Tax-Exempt Organizations 28
2 The United States Tax System: An Overview 31
§ 2.1 Concept of Income 33
§ 2.2 Gross Income 34
§ 2.3 Exclusions from Income 35
§ 2.4 Concept of Adjusted Gross Income 36
§ 2.5 Deductions 37
§ 2.6 Standard Deduction 39
§ 2.7 Concept of Taxable Income 39
§ 2.8 Taxable and Nontaxable Entities 41
§ 2.9 Annual Accounting Period 42
§ 2.10 Accounting Methods 43
§ 2.11 Timing 43
§ 2.12 Property 44
§ 2.13 Inventory 46
§ 2.14 Gain 47
§ 2.15 Taxation of Income 53
§ 2.16 Capital Assets, Gains, and Losses 58
§ 2.17 Carryovers and Carrybacks 60
§ 2.18 Alternative Minimum Tax 61
§ 2.19 Depreciation 64
§ 2.20 Capital Gains and Losses Rates 65
§ 2.21 Taxation of Corporate Distributions 65
§ 2.22 Accumulated Earnings and Personal Holding Company Taxes 66
§ 2.23 Tax Credits 66
§ 2.24 Foreign Tax Credits 67
§ 2.25 Federal Tax Law Definition of Marriage 67
PART TWO Basics of Charitable Giving Law
3 Fundamental Concepts 71
§ 3.1 Meaning of Gift 71
§ 3.2 Meaning of Donor 117
§ 3.3 Meaning of Charitable Organization 119
§ 3.4 Public Charities and Private Foundations 131
§ 3.5 Unrelated Business Rules 146
§ 3.6 Factors Affecting Income Tax Deductibility of Charitable Gifts 153
§ 3.7 Charitable Organizations Listing Reliance Rules 155
§ 3.8 Grantor Trust Rules 157
4 Gifts of Money and Property 161
§ 4.1 Gifts of Money 161
§ 4.2 Gifts of Property in General 162
§ 4.3 Gifts of Long-Term Capital Gain Property in General 164
§ 4.4 Gifts of Ordinary Income Property 165
§ 4.5 Certain Gifts of Capital Gain Property 170
§ 4.6 Gifts of Property for Unrelated Use 173
§ 4.7 Variations in Applying Property Rules 177
§ 4.8 Step Transaction Doctrine 178
§ 4.9 Charitable Pledges 184
5 Fundamentals of Planned Giving 187
§ 5.1 Introduction 188
§ 5.2 Appreciated Property Gifts 188
§ 5.3 Planned Gifts: Core Concepts 189
§ 5.4 Charitable Remainder Trusts 191
§ 5.5 Pooled Income Funds 199
§ 5.6 Charitable Gift Annuities 207
§ 5.7 Charitable Lead Trusts 208
§ 5.8 Planned Giving: Other Forms 211
§ 5.9 Planned Giving and Securities Laws 212
PART THREE Charitable Giving in General
6 Timing of Charitable Deductions 217
§ 6.1 Gifts of Money in General 219
§ 6.2 Gifts of Money by Check 219
§ 6.3 Gifts of Money by Credit Card 222
§ 6.4 Gifts of Money by Telephone 222
§ 6.5 Gifts of Securities 223
§ 6.6 Gifts of Copyright Interest 226
§ 6.7 Gifts by Means of Notes 226
§ 6.8 Gifts by Letters of Credit 227
§ 6.9 Gifts of Property Subject to Option 227
§ 6.10 Gifts of Stock Options 228
§ 6.11 Gifts of Credit Card Rebates 230
§ 6.12 Gifts of Tangible Personal Property 231
§ 6.13 Gifts of Real Property 231
§ 6.14 Gifts by C Corporations 232
§ 6.15 Gifts by S Corporations 233
§ 6.16 Gifts by Partnerships 234
§ 6.17 Gifts by Means of Internet 237
7 Percentage Limitations 239
§ 7.1 Introduction 240
§ 7.2 Individual’s Contribution Base 243
§ 7.3 Corporation’s Taxable Income 243
§ 7.4 Percentage Limitations: An Overview 243
§ 7.5 Fifty Percent Limitation 246
§ 7.6 Thirty Percent Limitation for Gifts of Certain Property 253
§ 7.7 Electable 50 Percent Limitation 257
§ 7.8 General 30 Percent Limitation 263
§ 7.9 Interplay of 50 Percent/Special 30 Percent Limitations 265
§ 7.10 Interplay of 50 Percent/General 30 Percent Limitations 266
§ 7.11 Interplay of Special 30 Percent/General 30 Percent Limitations 268
§ 7.12 Twenty Percent Limitation 268
§ 7.13 Gifts for the Use of Charity 270
§ 7.14 Blending Percentage Limitations 270
§ 7.15 Individuals’ Net Operating Loss Carryovers and Carrybacks 271
§ 7.16 Rules for Spouses 275
§ 7.17 Information Requirements 279
§ 7.18 Percentage Limitation for Corporations 280
§ 7.19 Corporations’ Net Operating Loss Carryovers and Carrybacks 283
8 Estate and Gift Tax Considerations 287
§ 8.1 Introduction 287
§ 8.2 Federal Gift Tax 289
§ 8.3 Federal Estate Tax 301
§ 8.4 Unification of Taxes 315
§ 8.5 Generation-Skipping Transfer Tax 316
§ 8.6 Remainder Interests 319
§ 8.7 Ascertainability 329
9 Special Gift Situations 333
§ 9.1 Works of Art 334
§ 9.2 Gems 338
§ 9.3 Inventory 340
§ 9.4 Scientific Research Property 352
§ 9.5 Computer Technology or Equipment 353
§ 9.6 License to Use Patent 355
§ 9.7 Conservation Property 357
§ 9.8 S Corporation Stock 380
§ 9.9 Section 306 Stock 389
§ 9.10 Retirement Plan Accounts 391
§ 9.11 Commodity Futures Contracts 401
§ 9.12 Donors’ Creations 403
§ 9.13 Charity Auctions 404
§ 9.14 Services 411
§ 9.15 Unreimbursed Expenses 412
§ 9.16 Limitation on Deduction for Expenses Due to Pleasure 418
§ 9.17 Automobile Expenses 422
§ 9.18 Use of Property 422
§ 9.19 Bargain Sales 423
§ 9.20 Property Subject to Debt 429
§ 9.21 Future Interests in Tangible Personal Property 433
§ 9.22 Contributions by Trusts 436
§ 9.23 Partial Interests 444
§ 9.24 Taxidermy 447
§ 9.25 Clothing and Household Items 448
§ 9.26 Charitable Family Limited Partnerships 448
§ 9.27 Motor and Other Vehicles 450
§ 9.28 Intellectual Property 457
§ 9.29 Foreign Tax Credit 462
§ 9.30 Subsistence Whaling Expenses 462
§ 9.31 Public Policy Considerations 463
10 Other Aspects of Deductible Giving 471
§ 10.1 Valuation of Property 472
§ 10.2 Contributions by Means of an Agent 496
§ 10.3 Gifts for the Use of Charity 497
§ 10.4 Conditional Gifts 499
§ 10.5 Earmarking of Gifts for Individuals 505
§ 10.6 Alternative Minimum Tax Considerations 508
§ 10.7 Interrelationship with Business Expense Deduction 509
§ 10.8 Denial of Deduction for Lobbying Activities 510
§ 10.9 Deductible Gifts to Noncharitable Organizations 511
§ 10.10 Reallocation of Deductions 516
§ 10.11 Charitable Giving and Funding of Terrorism 517
§ 10.12 Statute of Limitations 518
§ 10.13 Concept of Trust Income 518
§ 10.14 Penalties 521
§ 10.15 Transactions of Interest 532
PART FOUR Planned Giving
11 Valuation of Partial Interests 541
§ 11.1 Overview of Statutory Law 541
§ 11.2 Standard Actuarial Factors 542
§ 11.3 General Actuarial Valuations 544
§ 11.4 Nonstandard Actuarial Factors 547
12 Charitable Remainder Trusts 551
§ 12.1 Definitions 552
§ 12.2 Charitable Remainder Annuity Trust Rules 566
§ 12.3 Charitable Remainder Unitrust Rules 580
§ 12.4 Issues 598
§ 12.5 Tax Treatment of Distributions 615
§ 12.6 Division of Charitable Remainder Trusts 627
§ 12.7 Early Terminations of Charitable Remainder Trusts 631
§ 12.8 Taxation of Charitable Remainder Trusts 633
§ 12.9 Mandatory Provisions 636
§ 12.10 Private Foundation Rules 637
§ 12.11 Wealth Replacement Trusts 639
§ 12.12 Calculation of Charitable Deduction 646
13 Pooled Income Funds 653
§ 13.1 Definitions 654
§ 13.2 Qualifying Pooled Income Funds 655
§ 13.3 Allocation of Income 661
§ 13.4 Recognition of Gain or Loss on Transfers 665
§ 13.5 Mandatory Provisions 666
§ 13.6 Private Foundation Rules 667
§ 13.7 Pass-Through of Depreciation 668
§ 13.8 Tax Status of Fund and Beneficiaries 669
§ 13.9 Multiorganization Pooled Income Funds 670
§ 13.10 Comparison with Charitable Remainder Trusts 674
§ 13.11 Charitable Contribution Deduction 675
14 Charitable Gift Annuities 677
§ 14.1 Contract as Vehicle Form 677
§ 14.2 Tax Treatment to Donor 678
§ 14.3 Deferred Payment Gift Annuities 679
§ 14.4 Estate and Gift Tax Consequences 681
§ 14.5 Unrelated Business Income Implications 681
§ 14.6 Unrelated Debt-Financed Income Implications 682
§ 14.7 Contrast with Other Planned Gift Methods 683
§ 14.8 Gift Annuities and Antitrust Laws 684
§ 14.9 Gift Annuities and Securities Laws 685
§ 14.10 Charitable Contribution Deduction 685
15 Other Gifts of Remainder Interests 687
§ 15.1 Overview 687
§ 15.2 Contributions of Remainder Interests in Personal Residence or Farm 688
§ 15.3 Undivided Portions of Entire Interests in Property 691
16 Charitable Lead Trusts 701
§ 16.1 General Rules 701
§ 16.2 Income Interest 702
§ 16.3 Income Tax Charitable Deduction 704
§ 16.4 Tax Treatment of Charitable Lead Trusts 705
§ 16.5 Testamentary Use of Charitable Lead Trusts 707
§ 16.6 Percentage Limitation Rules 708
§ 16.7 Private Foundation Rules 709
§ 16.8 Anti-Abuse Rule Concerning Income Interests 710
§ 16.9 Charitable Income Trusts 713
§ 16.10 Comparison with Charitable Remainder Trusts 713
§ 16.11 Valuing Charitable Deduction 714
17 Gifts of and Using Life Insurance 715
§ 17.1 Introduction 715
§ 17.2 Life Insurance Concepts 716
§ 17.3 Charitable Giving and Insurance 719
§ 17.4 Insurable Interest 724
§ 17.5 Unrelated Debt-Financed Income Considerations 727
§ 17.6 Charitable Split-Dollar Insurance Plans 728
§ 17.7 Applicable Insurance Contract Reporting Requirements 735
PART FIVE International Charitable Giving
18 International Giving by Individuals During Lifetime 739
§ 18.1 Introduction 739
§ 18.2 Background 740
§ 18.3 Earmarking and Conduit Restrictions 743
§ 18.4 Control Over Foreign Donees 747
§ 18.5 Summary 749
§ 18.6 Income Tax Treaties 750
19 International Giving by Individuals through Estates 753
§ 19.1 Introduction 753
§ 19.2 Estate Tax Rules 754
§ 19.3 Gift Tax Rules 760
§ 19.4 Charitable Giving by Noncitizen Nonresidents 760
20 International Giving by Corporations 763
§ 20.1 Corporate Gifts to U.S. Charity for Overseas Use 763
§ 20.2 Gifts of Money from Foreign Affiliate of U.S. Parent to Overseas Charity 764
§ 20.3 Gift of Goods or Services to Benefit Foreign Charity 765
§ 20.4 Grants of Funds from U.S. Corporation–Related Foundation to Foreign Charity 766
PART SIX Administration of Charitable Giving Programs
21 Substantiation and Appraisal Requirements 779
§ 21.1 Introduction 779
§ 21.2 Substantiation Requirements for Gifts of Money 780
§ 21.3 Substantiation Requirements for Gifts of $250 or More 782
§ 21.4 Substantiation Requirements for Noncash Gifts 792
§ 21.5 Appraisal Requirements 795
§ 21.6 Appraisals and Penalties 805
§ 21.7 Appraisals of Clothing and Household Items 807
§ 21.8 Burden of Proof Rules 807
22 Disclosure Requirements 809
§ 22.1 Disclosure by Charitable Organizations in General 809
§ 22.2 Quid Pro Quo Contribution Rules 814
§ 22.3 Disclosure by Noncharitable Organizations 818
23 Special Events, Corporate Sponsorships, and Donor-Advised Funds 823
§ 23.1 IRS Audit Guidelines 824
§ 23.2 Special Events 828
§ 23.3 Corporate Sponsorship Rules 830
§ 23.4 Donor-Advised Funds 833
24 Reporting Requirements 841
§ 24.1 Gift Reporting by Individuals 841
§ 24.2 Gift Reporting by C Corporations 842
§ 24.3 Gift Reporting by S Corporations 842
§ 24.4 Gift Reporting by Partnerships 842
§ 24.5 Gift Reporting by Donees in General 843
§ 24.6 Gift Reporting in Unrelated Business Context 848
§ 24.7 Reporting of Noncash Gifts in General 851
§ 24.8 Reporting of Gifts of Vehicles 868
§ 24.9 Reporting of Gifts of Intellectual Property 870
§ 24.10 Reporting on Dispositions of Contributed Property 871
§ 24.11 Personal Benefit Contract Reporting Requirements 874
§ 24.12 Split-Interest Trust Filing Requirements 875
25 State Fundraising Regulation 877
§ 25.1 State Regulation in General 877
§ 25.2 Historical Perspective 878
§ 25.3 States’ Police Power 880
§ 25.4 Basic Definitions 881
§ 25.5 Registration Requirements 882
§ 25.6 Reporting Requirements 882
§ 25.7 Exemptions from Regulation 883
§ 25.8 Fundraising Cost Limitations 884
