Charitable Contributions by Corporations discusses issues that arise in connection with the income tax deduction for charitable contributions made by corporations. Although the basic rules authorizing an income tax deduction for contributions by individuals and corporations are similar, corporations contemplating charitable contributions, or creating their own charitable foundations, encounter a number of problems not applicable to individuals.

Written by Carolyn M. Osteen, Esq. and A. L. Spitzer, Esq., both of the law firm Ropes & Gray LLP, this Portfolio analyzes the mechanical rules governing the charitable deduction as they apply to corporate donors, including the special rules applicable to gifts of inventory, the special problems of closely-held corporations, corporate foundations, the percentage limitations and carryovers applicable to contributions by corporations, and the issues posed by the interrelation of §§162 (Trade or Business Expenses) and 170 (Charitable Contributions and Gifts) of the Internal Revenue Code, as well as alternatives to direct corporate giving.

Charitable Contributions by Corporations allows you to benefit from:

• Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area
• Invaluable practice documents including tables, charts and lists
• Plain-English guidance from world-class experts
• Real-world and in-depth analysis that lets you explore various options
• Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more
• Alternative approaches to both common and unique tax scenarios

This Portfolio is part of the U.S. Income Portfolios Library, a comprehensive series that includes more than 200 Portfolios, which covers every federal tax topic with expert, in-depth analysis, and offer commentary on a wide range of federal taxation topics, including Compensation Planning, Deductions and Credits, Partnerships and Corporations, Special Pass-Through Entities, Corporate Reorganizations, Real Estate, Procedure and Administration, and more.

Detailed Analysis

I. Requirements for a Charitable Deduction

A. In General

B. Corporate vs. Individual Charitable Contribution

C. Fair Market Value

1. Usual Market

2. Fair Market Value of Publicly Traded Securities

3. Contribution When Usual Price Could Not Have Been Expected

4. Abuse Problems Relating to Gifts of Appreciated Property

D. Appraisal Rules

1. What Must Be Appraised

2. "Qualified Appraisal"

3. "Qualified Appraiser"

4. 2006 PPA Guidance

5. The Appraisal Summary-Form 8283

6. Reporting Sales by a Charity-Form 8282

7. The Appraisal Fee

8. Penalties

E. Recordkeeping Requirements

F. Acknowledgment of Charitable Gifts and Quid Pro Quo Rules

1. Acknowledgment

2. Quid Pro Quo Disclosure

3. Criteria for Deductibility

G. Payments for Right to Purchase Tickets to College Athletic Events

II. Special Provisions Pertaining to Corporations

A. Fraternal Associations

B. Domestic Use Restriction

C. Accrual Basis Corporations

1. In General

2. Election and Authorization

3. Time of Payment

III. Denial of § 170 Treatment

A. Relationship Between Donee and Corporate Donor

B. Contributions of Partial Interests in Property

C. Gifts of Stock by Individuals to Avoid Income

D. Validity of Corporate Contributions Under State Law

E. TIPRA Penalties

1. Listed Transactions

2. Prohibited Reportable Transactions

IV. Contribution Rules for Inventory

Introductory Material

A. General Rules

B. Qualified Contribution Exception

1. Requirements for Qualified Contribution

2. Special Rules Applicable to the Qualified Contribution Exception-Recapture Amounts

3. Basis of Inventory and Adjustment to Cost of Goods Sold

C. Exception for Contributions of Research Property

D. Exception for Donations of Computer Technology

E. Gifts of Tangible Personal Property for Non-Exempt Purposes

F. Special Rule for Contributions of Qualified Appreciated Stock - § 170(e)(5)

G. Inventory Accounting Rules

V. Other § 170 Requirements of Importance to Corporate Charitable Contributions

A. Percentage Limitations

1. In General

2. Avoiding the Percentage Limitation

3. Effect of Charitable Contributions on Earnings and Profits

B. Lead Trusts

C. Carryovers and Carryback Rules for Excess Contributions

1. In General

2. Net Operating Loss Carryover

3. Net Operating Loss Carrybacks

4. Capital Losses

5. Availability of Charitable Contribution Carryover to Acquiring Corporations Under § 381

a. Section 381 in General

b. Section 381(c)(19)

D. Research Tax Credits

E. Bargain Sales to Charity

VI. The Relationship of § § 170 and 162

A. In General

B. The Requirement of Economic Motivation Under § 162

C. What Is a Charitable Contribution?-The Requirement of Gratuity Under § 170

D. Corporate Sponsorships of Charitable Organizations-The Issue of UBTI

VII. Special Provisions for S Corporations

A. Comparison of S Corporations and Partnerships When Making Gifts at the Corporate Level

B. Gifts of S Corporation Stock-Taxation of UBTI

C. Reduction of Donor's Deduction for a Gift of S Corporation Stock

VIII. Creating a Corporate Foundation

A. In General

B. Private Foundation Rules

C. Company Scholarships

D. Potential Advantages

E. Potential Disadvantages

IX. Alternatives to Direct Corporate Giving: Supporting Organizations, Donor-Advised Funds, and Commercial Co-Venturing Arrangements

A. Supporting Organizations

1. Limitation on Control by Disqualified Persons

2. Potential Advantages of Supporting Organizations

3. Potential Disadvantages of Supporting Organizations

B. Donor-Advised Funds

1. Growth of "National" Donor-Advised Funds Maintained by Financial Services Firms

2. Potential Advantages of Donor-Advised Funds

3. Potential Disadvantages of Donor-Advised Funds

C. Soliciting Funds on Behalf of Charities: Commercial Co-Venturing Arrangements

X. Disaster Relief

Introductory Material

A. In General

B. Response to September 11, 2001

C. General Provisions of the Victims of Terrorism Act

D. Creating a Disaster Relief Organization Post Hoc

XI. Miscellaneous Matters Relating to Corporate Contributions

Introductory Material

A. Exempt Organizations Subject to Tax on Unrelated Business Income

B. Corporations Subject to the Accumulated Earnings Tax

C. Personal Holding Companies

D. Foreign Corporations

Working Papers

Table of Worksheets

Worksheet 1 Sample Section 170(a)(2) Election for Accrual Basis Corporation to Deduct Contribution Made in Following Year

Worksheet 2 Tax Reform Act of 1976 - Enactment of § 170(e)(3)

Worksheet 3 Taxpayer Relief Act of 1997 - Enactment of § 170(e)(6)

Bibliography

OFFICIAL

Statutes:

Regulations:

Legislative History:

Treasury Rulings:

Cases:

UNOFFICIAL

Texts and Treatises:

Periodicals:

1960

1970

1980

1988

1989

1991

1992

1993

1999

2001

2002

2005

2008