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U.S. Code as of:
01/19/04
Section 170. Charitable, etc., contributions and gifts
(a) Allowance of deduction
(1) General rule
There shall be allowed as a deduction any charitable
contribution (as defined in subsection (c)) payment of which is
made within the taxable year. A charitable contribution shall be
allowable as a deduction only if verified under regulations
prescribed by the Secretary.
(2) Corporations on accrual basis
In the case of a corporation reporting its taxable income on
the accrual basis, if -
(A) the board of directors authorizes a charitable
contribution during any taxable year, and
(B) payment of such contribution is made after the close of
such taxable year and on or before the 15th day of the third
month following the close of such taxable year,
then the taxpayer may elect to treat such contribution as paid
during such taxable year. The election may be made only at the
time of the filing of the return for such taxable year, and shall
be signified in such manner as the Secretary shall by regulations
prescribe.
(3) Future interests in tangible personal property
For purposes of this section, payment of a charitable
contribution which consists of a future interest in tangible
personal property shall be treated as made only when all
intervening interests in, and rights to the actual possession or
enjoyment of, the property have expired or are held by persons
other than the taxpayer or those standing in a relationship to
the taxpayer described in section 267(b) or 707(b). For purposes
of the preceding sentence, a fixture which is intended to be
severed from the real property shall be treated as tangible
personal property.
(b) Percentage limitations
(1) Individuals
In the case of an individual, the deduction provided in
subsection (a) shall be limited as provided in the succeeding
subparagraphs.
(A) General rule
Any charitable contribution to -
(i) a church or a convention or association of churches,
(ii) an educational organization which normally maintains a
regular faculty and curriculum and normally has a regularly
enrolled body of pupils or students in attendance at the
place where its educational activities are regularly carried
on,
(iii) an organization the principal purpose or functions of
which are the providing of medical or hospital care or
medical education or medical research, if the organization is
a hospital, or if the organization is a medical research
organization directly engaged in the continuous active
conduct of medical research in conjunction with a hospital,
and during the calendar year in which the contribution is
made such organization is committed to spend such
contributions for such research before January 1 of the fifth
calendar year which begins after the date such contribution
is made,
(iv) an organization which normally receives a substantial
part of its support (exclusive of income received in the
exercise or performance by such organization of its
charitable, educational, or other purpose or function
constituting the basis for its exemption under section
501(a)) from the United States or any State or political
subdivision thereof or from direct or indirect contributions
from the general public, and which is organized and operated
exclusively to receive, hold, invest, and administer property
and to make expenditures to or for the benefit of a college
or university which is an organization referred to in clause
(ii) of this subparagraph and which is an agency or
instrumentality of a State or political subdivision thereof,
or which is owned or operated by a State or political
subdivision thereof or by an agency or instrumentality of one
or more States or political subdivisions,
(v) a governmental unit referred to in subsection (c)(1),
(vi) an organization referred to in subsection (c)(2) which
normally receives a substantial part of its support
(exclusive of income received in the exercise or performance
by such organization of its charitable, educational, or other
purpose or function constituting the basis for its exemption
under section 501(a)) from a governmental unit referred to in
subsection (c)(1) or from direct or indirect contributions
from the general public,
(vii) a private foundation described in subparagraph (E),
or
(viii) an organization described in section 509(a)(2) or
(3),
shall be allowed to the extent that the aggregate of such
contributions does not exceed 50 percent of the taxpayer's
contribution base for the taxable year.
(B) Other contributions
Any charitable contribution other than a charitable
contribution to which subparagraph (A) applies shall be allowed
to the extent that the aggregate of such contributions does not
exceed the lesser of -
(i) 30 percent of the taxpayer's contribution base for the
taxable year, or
(ii) the excess of 50 percent of the taxpayer's
contribution base for the taxable year over the amount of
charitable contributions allowable under subparagraph (A)
(determined without regard to subparagraph (C)).
If the aggregate of such contributions exceeds the limitation
of the preceding sentence, such excess shall be treated (in a
manner consistent with the rules of subsection (d)(1)) as a
charitable contribution (to which subparagraph (A) does not
apply) in each of the 5 succeeding taxable years in order of
time.
(C) Special limitation with respect to contributions described
in subparagraph (A) of certain capital gain property
(i) In the case of charitable contributions described in
subparagraph (A) of capital gain property to which subsection
(e)(1)(B) does not apply, the total amount of contributions
of such property which may be taken into account under
subsection (a) for any taxable year shall not exceed 30
percent of the taxpayer's contribution base for such year.
For purposes of this subsection, contributions of capital
gain property to which this subparagraph applies shall be
taken into account after all other charitable contributions
(other than charitable contributions to which subparagraph
(D) applies).
(ii) If charitable contributions described in subparagraph
(A) of capital gain property to which clause (i) applies
exceeds 30 percent of the taxpayer's contribution base for
any taxable year, such excess shall be treated, in a manner
consistent with the rules of subsection (d)(1), as a
charitable contribution of capital gain property to which
clause (i) applies in each of the 5 succeeding taxable years
in order of time.
(iii) At the election of the taxpayer (made at such time
and in such manner as the Secretary prescribes by
regulations), subsection (e)(1) shall apply to all
contributions of capital gain property (to which subsection
(e)(1)(B) does not otherwise apply) made by the taxpayer
during the taxable year. If such an election is made, clauses
(i) and (ii) shall not apply to contributions of capital gain
property made during the taxable year, and, in applying
subsection (d)(1) for such taxable year with respect to
contributions of capital gain property made in any prior
contribution year for which an election was not made under
this clause, such contributions shall be reduced as if
subsection (e)(1) had applied to such contributions in the
year in which made.
(iv) For purposes of this paragraph, the term "capital gain
property" means, with respect to any contribution, any
capital asset the sale of which at its fair market value at
the time of the contribution would have resulted in gain
which would have been long-term capital gain. For purposes of
the preceding sentence, any property which is property used
in the trade or business (as defined in section 1231(b))
shall be treated as a capital asset.
(D) Special limitation with respect to contributions of capital
gain property to organizations not described in subparagraph
(A)
(i) In general
In the case of charitable contributions (other than
charitable contributions to which subparagraph (A) applies)
of capital gain property, the total amount of such
contributions of such property taken into account under
subsection (a) for any taxable year shall not exceed the
lesser of -
(I) 20 percent of the taxpayer's contribution base for
the taxable year, or
(II) the excess of 30 percent of the taxpayer's
contribution base for the taxable year over the amount of
the contributions of capital gain property to which
subparagraph (C) applies.
For purposes of this subsection, contributions of capital
gain property to which this subparagraph applies shall be
taken into account after all other charitable contributions.
(ii) Carryover
If the aggregate amount of contributions described in
clause (i) exceeds the limitation of clause (i), such excess
shall be treated (in a manner consistent with the rules of
subsection (d)(1)) as a charitable contribution of capital
gain property to which clause (i) applies in each of the 5
succeeding taxable years in order of time.
(E) Certain private foundations
The private foundations referred to in subparagraph (A)(vii)
and subsection (e)(1)(B) are -
(i) a private operating foundation (as defined in section
4942(j)(3)),
(ii) any other private foundation (as defined in section
509(a)) which, not later than the 15th day of the third month
after the close of the foundation's taxable year in which
contributions are received, makes qualifying distributions
(as defined in section 4942(g), without regard to paragraph
(3) thereof), which are treated, after the application of
section 4942(g)(3), as distributions out of corpus (in
accordance with section 4942(h)) in an amount equal to 100
percent of such contributions, and with respect to which the
taxpayer obtains adequate records or other sufficient
evidence from the foundation showing that the foundation made
such qualifying distributions, and
(iii) a private foundation all of the contributions to
which are pooled in a common fund and which would be
described in section 509(a)(3) but for the right of any
substantial contributor (hereafter in this clause called
"donor") or his spouse to designate annually the recipients,
from among organizations described in paragraph (1) of
section 509(a), of the income attributable to the donor's
contribution to the fund and to direct (by deed or by will)
the payment, to an organization described in such paragraph
(1), of the corpus in the common fund attributable to the
donor's contribution; but this clause shall apply only if all
of the income of the common fund is required to be (and is)
distributed to one or more organizations described in such
paragraph (1) not later than the 15th day of the third month
after the close of the taxable year in which the income is
realized by the fund and only if all of the corpus
attributable to any donor's contribution to the fund is
required to be (and is) distributed to one or more of such
organizations not later than one year after his death or
after the death of his surviving spouse if she has the right
to designate the recipients of such corpus.
(F) Contribution base defined
For purposes of this section, the term "contribution base"
means adjusted gross income (computed without regard to any net
operating loss carryback to the taxable year under section
172).
(2) Corporations
In the case of a corporation, the total deductions under
subsection (a) for any taxable year shall not exceed 10 percent
of the taxpayer's taxable income computed without regard to -
(A) this section,
(B) part VIII (except section 248),
(C) any net operating loss carryback to the taxable year
under section 172, and
(D) any capital loss carryback to the taxable year under
section 1212(a)(1).
(c) Charitable contribution defined
For purposes of this section, the term "charitable contribution"
means a contribution or gift to or for the use of -
(1) A State, a possession of the United States, or any
political subdivision of any of the foregoing, or the United
States or the District of Columbia, but only if the contribution
or gift is made for exclusively public purposes.
(2) A corporation, trust, or community chest, fund, or
foundation -
(A) created or organized in the United States or in any
possession thereof, or under the law of the United States, any
State, the District of Columbia, or any possession of the
United States;
(B) organized and operated exclusively for religious,
charitable, scientific, literary, or educational purposes, or
to foster national or international amateur sports competition
(but only if no part of its activities involve the provision of
athletic facilities or equipment), or for the prevention of
cruelty to children or animals;
(C) no part of the net earnings of which inures to the
benefit of any private shareholder or individual; and
(D) which is not disqualified for tax exemption under section
501(c)(3) by reason of attempting to influence legislation, and
which does not participate in, or intervene in (including the
publishing or distributing of statements), any political
campaign on behalf of (or in opposition to) any candidate for
public office.
A contribution or gift by a corporation to a trust, chest, fund,
or foundation shall be deductible by reason of this paragraph
only if it is to be used within the United States or any of its
possessions exclusively for purposes specified in subparagraph
(B). Rules similar to the rules of section 501(j) shall apply for
purposes of this paragraph.
(3) A post or organization of war veterans, or an auxiliary
unit or society of, or trust or foundation for, any such post or
organization -
(A) organized in the United States or any of its possessions,
and
(B) no part of the net earnings of which inures to the
benefit of any private shareholder or individual.
(4) In the case of a contribution or gift by an individual, a
domestic fraternal society, order, or association, operating
under the lodge system, but only if such contribution or gift is
to be used exclusively for religious, charitable, scientific,
literary, or educational purposes, or for the prevention of
cruelty to children or animals.
(5) A cemetery company owned and operated exclusively for the
benefit of its members, or any corporation chartered solely for
burial purposes as a cemetery corporation and not permitted by
its charter to engage in any business not necessarily incident to
that purpose, if such company or corporation is not operated for
profit and no part of the net earnings of such company or
corporation inures to the benefit of any private shareholder or
individual.
For purposes of this section, the term "charitable contribution"
also means an amount treated under subsection (g) as paid for the
use of an organization described in paragraph (2), (3), or (4).
(d) Carryovers of excess contributions
(1) Individuals
(A) In general
In the case of an individual, if the amount of charitable
contributions described in subsection (b)(1)(A) payment of
which is made within a taxable year (hereinafter in this
paragraph referred to as the "contribution year") exceeds 50
percent of the taxpayer's contribution base for such year, such
excess shall be treated as a charitable contribution described
in subsection (b)(1)(A) paid in each of the 5 succeeding
taxable years in order of time, but, with respect to any such
succeeding taxable year, only to the extent of the lesser of
the two following amounts:
(i) the amount by which 50 percent of the taxpayer's
contribution base for such succeeding taxable year exceeds
the sum of the charitable contributions described in
subsection (b)(1)(A) payment of which is made by the taxpayer
within such succeeding taxable year (determined without
regard to this subparagraph) and the charitable contributions
described in subsection (b)(1)(A) payment of which was made
in taxable years before the contribution year which are
treated under this subparagraph as having been paid in such
succeeding taxable year; or
(ii) in the case of the first succeeding taxable year, the
amount of such excess, and in the case of the second, third,
fourth, or fifth succeeding taxable year, the portion of such
excess not treated under this subparagraph as a charitable
contribution described in subsection (b)(1)(A) paid in any
taxable year intervening between the contribution year and
such succeeding taxable year.
(B) Special rule for net operating loss carryovers
In applying subparagraph (A), the excess determined under
subparagraph (A) for the contribution year shall be reduced to
the extent that such excess reduces taxable income (as computed
for purposes of the second sentence of section 172(b)(2)) and
increases the net operating loss deduction for a taxable year
succeeding the contribution year.
(2) Corporations
(A) In general
Any contribution made by a corporation in a taxable year
(hereinafter in this paragraph referred to as the "contribution
year") in excess of the amount deductible for such year under
subsection (b)(2) shall be deductible for each of the 5
succeeding taxable years in order of time, but only to the
extent of the lesser of the two following amounts: (i) the
excess of the maximum amount deductible for such succeeding
taxable year under subsection (b)(2) over the sum of the
contributions made in such year plus the aggregate of the
excess contributions which were made in taxable years before
the contribution year and which are deductible under this
subparagraph for such succeeding taxable year; or (ii) in the
case of the first succeeding taxable year, the amount of such
excess contribution, and in the case of the second, third,
fourth, or fifth succeeding taxable year, the portion of such
excess contribution not deductible under this subparagraph for
any taxable year intervening between the contribution year and
such succeeding taxable year.
(B) Special rule for net operating loss carryovers
For purposes of subparagraph (A), the excess of -
(i) the contributions made by a corporation in a taxable
year to which this section applies, over
(ii) the amount deductible in such year under the
limitation in subsection (b)(2),
shall be reduced to the extent that such excess reduces taxable
income (as computed for purposes of the second sentence of
section 172(b)(2)) and increases a net operating loss carryover
under section 172 to a succeeding taxable year.
(e) Certain contributions of ordinary income and capital gain
property
(1) General rule
The amount of any charitable contribution of property otherwise
taken into account under this section shall be reduced by the sum
of -
(A) the amount of gain which would not have been long-term
capital gain if the property contributed had been sold by the
taxpayer at its fair market value (determined at the time of
such contribution), and
(B) in the case of a charitable contribution -
(i) of tangible personal property, if the use by the donee
is unrelated to the purpose or function constituting the
basis for its exemption under section 501 (or, in the case of
a governmental unit, to any purpose or function described in
subsection (c)), or
(ii) to or for the use of a private foundation (as defined
in section 509(a)), other than a private foundation described
in subsection (b)(1)(E),
the amount of gain which would have been long-term capital gain
if the property contributed had been sold by the taxpayer at
its fair market value (determined at the time of such
contribution).
For purposes of applying this paragraph (other than in the case
of gain to which section 617(d)(1), 1245(a), 1250(a), 1252(a), or
1254(a) applies), property which is property used in the trade or
business (as defined in section 1231(b)) shall be treated as a
capital asset. For purposes of applying this paragraph in the
case of a charitable contribution of stock in an S corporation,
rules similar to the rules of section 751 shall apply in
determining whether gain on such stock would have been long-term
capital gain if such stock were sold by the taxpayer.
(2) Allocation of basis
For purposes of paragraph (1), in the case of a charitable
contribution of less than the taxpayer's entire interest in the
property contributed, the taxpayer's adjusted basis in such
property shall be allocated between the interest contributed and
any interest not contributed in accordance with regulations
prescribed by the Secretary.
(3) Special rule for certain contributions of inventory and other
property
(A) Qualified contributions
For purposes of this paragraph, a qualified contribution
shall mean a charitable contribution of property described in
paragraph (1) or (2) of section 1221(a), by a corporation
(other than a corporation which is an S corporation) to an
organization which is described in section 501(c)(3) and is
exempt under section 501(a) (other than a private foundation,
as defined in section 509(a), which is not an operating
foundation, as defined in section 4942(j)(3)), but only if -
(i) the use of the property by the donee is related to the
purpose or function constituting the basis for its exemption
under section 501 and the property is to be used by the donee
solely for the care of the ill, the needy, or infants;
(ii) the property is not transferred by the donee in
exchange for money, other property, or services;
(iii) the taxpayer receives from the donee a written
statement representing that its use and disposition of the
property will be in accordance with the provisions of clauses
(i) and (ii); and
(iv) in the case where the property is subject to
regulation under the Federal Food, Drug, and Cosmetic Act, as
amended, such property must fully satisfy the applicable
requirements of such Act and regulations promulgated
thereunder on the date of transfer and for one hundred and
eighty days prior thereto.
(B) Amount of reduction
The reduction under paragraph (1)(A) for any qualified
contribution (as defined in subparagraph (A)) shall be no
greater than the sum of -
(i) one-half of the amount computed under paragraph (1)(A)
(computed without regard to this paragraph), and
(ii) the amount (if any) by which the charitable
contribution deduction under this section for any qualified
contribution (computed by taking into account the amount
determined in clause (i), but without regard to this clause)
exceeds twice the basis of such property.
(C) This paragraph shall not apply to so much of the amount
of the gain described in paragraph (1)(A) which would be
long-term capital gain but for the application of sections 617,
1245, 1250, or 1252.
(4) Special rule for contributions of scientific property used
for research
(A) Limit on reduction
In the case of a qualified research contribution, the
reduction under paragraph (1)(A) shall be no greater than the
amount determined under paragraph (3)(B).
(B) Qualified research contributions
For purposes of this paragraph, the term "qualified research
contribution" means a charitable contribution by a corporation
of tangible personal property described in paragraph (1) of
section 1221(a), but only if -
(i) the contribution is to an organization described in
subparagraph (A) or subparagraph (B) of section 41(e)(6),
(ii) the property is constructed by the taxpayer,
(iii) the contribution is made not later than 2 years after
the date the construction of the property is substantially
completed,
(iv) the original use of the property is by the donee,
(v) the property is scientific equipment or apparatus
substantially all of the use of which by the donee is for
research or experimentation (within the meaning of section
174), or for research training, in the United States in
physical or biological sciences,
(vi) the property is not transferred by the donee in
exchange for money, other property, or services, and
(vii) the taxpayer receives from the donee a written
statement representing that its use and disposition of the
property will be in accordance with the provisions of clauses
(v) and (vi).
(C) Construction of property by taxpayer
For purposes of this paragraph, property shall be treated as
constructed by the taxpayer only if the cost of the parts used
in the construction of such property (other than parts
manufactured by the taxpayer or a related person) do not exceed
50 percent of the taxpayer's basis in such property.
(D) Corporation
For purposes of this paragraph, the term "corporation" shall
not include -
(i) an S corporation,
(ii) a personal holding company (as defined in section
542), and
(iii) a service organization (as defined in section
414(m)(3)).
(5) Special rule for contributions of stock for which market
quotations are readily available
(A) In general
Subparagraph (B)(ii) of paragraph (1) shall not apply to any
contribution of qualified appreciated stock.
(B) Qualified appreciated stock
Except as provided in subparagraph (C), for purposes of this
paragraph, the term "qualified appreciated stock" means any
stock of a corporation -
(i) for which (as of the date of the contribution) market
quotations are readily available on an established securities
market, and
(ii) which is capital gain property (as defined in
subsection (b)(1)(C)(iv)).
(C) Donor may not contribute more than 10 percent of stock of
corporation
(i) In general
In the case of any donor, the term "qualified appreciated
stock" shall not include any stock of a corporation
contributed by the donor in a contribution to which paragraph
(1)(B)(ii) applies (determined without regard to this
paragraph) to the extent that the amount of the stock so
contributed (when increased by the aggregate amount of all
prior such contributions by the donor of stock in such
corporation) exceeds 10 percent (in value) of all of the
outstanding stock of such corporation.
(ii) Special rule
For purposes of clause (i), an individual shall be treated
as making all contributions made by any member of his family
(as defined in section 267(c)(4)).
(6) Special rule for contributions of computer technology and
equipment for educational purposes
(A) Limit on reduction
In the case of a qualified computer contribution, the
reduction under paragraph (1)(A) shall be no greater than the
amount determined under paragraph (3)(B).
(B) Qualified computer contribution
For purposes of this paragraph, the term "qualified computer
contribution" means a charitable contribution by a corporation
of any computer technology or equipment, but only if -
(i) the contribution is to -
(I) an educational organization described in subsection
(b)(1)(A)(ii),
(II) an entity described in section 501(c)(3) and exempt
from tax under section 501(a) (other than an entity
described in subclause (I)) that is organized primarily for
purposes of supporting elementary and secondary education,
or
(III) a public library (within the meaning of section
213(1)(A) of the Library Services and Technology Act (20
U.S.C. 9122(1)(A))),(!1) as in effect on the date of the
enactment of the Community Renewal Tax Relief Act of 2000),
established and maintained by an entity described in
subsection (c)(1),
(ii) the contribution is made not later than 3 years after
the date the taxpayer acquired the property (or in the case
of property constructed by the taxpayer, the date the
construction of the property is substantially completed),
(iii) the original use of the property is by the donor or
the donee,
(iv) substantially all of the use of the property by the
donee is for use within the United States for educational
purposes that are related to the purpose or function of the
donee,
(v) the property is not transferred by the donee in
exchange for money, other property, or services, except for
shipping, installation and transfer costs,
(vi) the property will fit productively into the donee's
education plan,
(vii) the donee's use and disposition of the property will
be in accordance with the provisions of clauses (iv) and (v),
and
(viii) the property meets such standards, if any, as the
Secretary may prescribe by regulation to assure that the
property meets minimum functionality and suitability
standards for educational purposes.
(C) Contribution to private foundation
A contribution by a corporation of any computer technology or
equipment to a private foundation (as defined in section 509)
shall be treated as a qualified computer contribution for
purposes of this paragraph if -
(i) the contribution to the private foundation satisfies
the requirements of clauses (ii) and (v) of subparagraph (B),
and
(ii) within 30 days after such contribution, the private
foundation -
(I) contributes the property to a donee described in
clause (i) of subparagraph (B) that satisfies the
requirements of clauses (iv) through (vii) of subparagraph
(B), and
(II) notifies the donor of such contribution.
(D) Donations of property reacquired by manufacturer
In the case of property which is reacquired by the person who
constructed the property -
(i) subparagraph (B)(ii) shall be applied to a contribution
of such property by such person by taking into account the
date that the original construction of the property was
substantially completed, and
(ii) subparagraph (B)(iii) shall not apply to such
contribution.
(E) Special rule relating to construction of property
For the purposes of this paragraph, the rules of paragraph
(4)(C) shall apply.
(F) Definitions
For the purposes of this paragraph -
(i) Computer technology or equipment
The term "computer technology or equipment" means computer
software (as defined by section 197(e)(3)(B)), computer or
peripheral equipment (as defined by section 168(i)(2)(B)),
and fiber optic cable related to computer use.
(ii) Corporation
The term "corporation" has the meaning given to such term
by paragraph (4)(D).
(G) Termination
This paragraph shall not apply to any contribution made
during any taxable year beginning after December 31, 2003.
(f) Disallowance of deduction in certain cases and special rules
(1) In general
No deduction shall be allowed under this section for a
contribution to or for the use of an organization or trust
described in section 508(d) or 4948(c)(4) subject to the
conditions specified in such sections.
(2) Contributions of property placed in trust
(A) Remainder interest
In the case of property transferred in trust, no deduction
shall be allowed under this section for the value of a
contribution of a remainder interest unless the trust is a
charitable remainder annuity trust or a charitable remainder
unitrust (described in section 664), or a pooled income fund
(described in section 642(c)(5)).
(B) Income interests, etc.
No deduction shall be allowed under this section for the
value of any interest in property (other than a remainder
interest) transferred in trust unless the interest is in the
form of a guaranteed annuity or the trust instrument specifies
that the interest is a fixed percentage distributed yearly of
the fair market value of the trust property (to be determined
yearly) and the grantor is treated as the owner of such
interest for purposes of applying section 671. If the donor
ceases to be treated as the owner of such an interest for
purposes of applying section 671, at the time the donor ceases
to be so treated, the donor shall for purposes of this chapter
be considered as having received an amount of income equal to
the amount of any deduction he received under this section for
the contribution reduced by the discounted value of all amounts
of income earned by the trust and taxable to him before the
time at which he ceases to be treated as the owner of the
interest. Such amounts of income shall be discounted to the
date of the contribution. The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this subparagraph.
(C) Denial of deduction in case of payments by certain trusts
In any case in which a deduction is allowed under this
section for the value of an interest in property described in
subparagraph (B), transferred in trust, no deduction shall be
allowed under this section to the grantor or any other person
for the amount of any contribution made by the trust with
respect to such interest.
(D) Exception
This paragraph shall not apply in a case in which the value
of all interests in property transferred in trust are
deductible under subsection (a).
(3) Denial of deduction in case of certain contributions of
partial interests in property
(A) In general
In the case of a contribution (not made by a transfer in
trust) of an interest in property which consists of less than
the taxpayer's entire interest in such property, a deduction
shall be allowed under this section only to the extent that the
value of the interest contributed would be allowable as a
deduction under this section if such interest had been
transferred in trust. For purposes of this subparagraph, a
contribution by a taxpayer of the right to use property shall
be treated as a contribution of less than the taxpayer's entire
interest in such property.
(B) Exceptions
Subparagraph (A) shall not apply to -
(i) a contribution of a remainder interest in a personal
residence or farm,
(ii) a contribution of an undivided portion of the
taxpayer's entire interest in property, and
(iii) a qualified conservation contribution.
(4) Valuation of remainder interest in real property
For purposes of this section, in determining the value of a
remainder interest in real property, depreciation (computed on
the straight line method) and depletion of such property shall be
taken into account, and such value shall be discounted at a rate
of 6 percent per annum, except that the Secretary may prescribe a
different rate.
(5) Reduction for certain interest
If, in connection with any charitable contribution, a liability
is assumed by the recipient or by any other person, or if a
charitable contribution is of property which is subject to a
liability, then, to the extent necessary to avoid the duplication
of amounts, the amount taken into account for purposes of this
section as the amount of the charitable contribution -
(A) shall be reduced for interest (i) which has been paid (or
is to be paid) by the taxpayer, (ii) which is attributable to
the liability, and (iii) which is attributable to any period
after the making of the contribution, and
(B) in the case of a bond, shall be further reduced for
interest (i) which has been paid (or is to be paid) by the
taxpayer on indebtedness incurred or continued to purchase or
carry such bond, and (ii) which is attributable to any period
before the making of the contribution.
The reduction pursuant to subparagraph (B) shall not exceed the
interest (including interest equivalent) on the bond which is
attributable to any period before the making of the contribution
and which is not (under the taxpayer's method of accounting)
includible in the gross income of the taxpayer for any taxable
year. For purposes of this paragraph, the term "bond" means any
bond, debenture, note, or certificate or other evidence of
indebtedness.
(6) Deductions for out-of-pocket expenditures
No deduction shall be allowed under this section for an
out-of-pocket expenditure made by any person on behalf of an
organization described in subsection (c) (other than an
organization described in section 501(h)(5) (relating to
churches, etc.)) if the expenditure is made for the purpose of
influencing legislation (within the meaning of section
501(c)(3)).
(7) Reformations to comply with paragraph (2)
(A) In general
A deduction shall be allowed under subsection (a) in respect
of any qualified reformation (within the meaning of section
2055(e)(3)(B)).
(B) Rules similar to section 2055(e)(3) to apply
For purposes of this paragraph, rules similar to the rules of
section 2055(e)(3) shall apply.
(8) Substantiation requirement for certain contributions
(A) General rule
No deduction shall be allowed under subsection (a) for any
contribution of $250 or more unless the taxpayer substantiates
the contribution by a contemporaneous written acknowledgment of
the contribution by the donee organization that meets the
requirements of subparagraph (B).
(B) Content of acknowledgement
An acknowledgement meets the requirements of this
subparagraph if it includes the following information:
(i) The amount of cash and a description (but not value) of
any property other than cash contributed.
(ii) Whether the donee organization provided any goods or
services in consideration, in whole or in part, for any
property described in clause (i).
(iii) A description and good faith estimate of the value of
any goods or services referred to in clause (ii) or, if such
goods or services consist solely of intangible religious
benefits, a statement to that effect.
For purposes of this subparagraph, the term "intangible
religious benefit" means any intangible religious benefit which
is provided by an organization organized exclusively for
religious purposes and which generally is not sold in a
commercial transaction outside the donative context.
(C) Contemporaneous
For purposes of subparagraph (A), an acknowledgment shall be
considered to be contemporaneous if the taxpayer obtains the
acknowledgment on or before the earlier of -
(i) the date on which the taxpayer files a return for the
taxable year in which the contribution was made, or
(ii) the due date (including extensions) for filing such
return.
(D) Substantiation not required for contributions reported by
the donee organization
Subparagraph (A) shall not apply to a contribution if the
donee organization files a return, on such form and in
accordance with such regulations as the Secretary may
prescribe, which includes the information described in
subparagraph (B) with respect to the contribution.
(E) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this
paragraph, including regulations that may provide that some or
all of the requirements of this paragraph do not apply in
appropriate cases.
(9) Denial of deduction where contribution for lobbying
activities
No deduction shall be allowed under this section for a
contribution to an organization which conducts activities to
which section 162(e)(1) applies on matters of direct financial
interest to the donor's trade or business, if a principal purpose
of the contribution was to avoid Federal income tax by securing a
deduction for such activities under this section which would be
disallowed by reason of section 162(e) if the donor had conducted
such activities directly. No deduction shall be allowed under
section 162(a) for any amount for which a deduction is disallowed
under the preceding sentence.
(10) Split-dollar life insurance, annuity, and endowment
contracts
(A) In general
Nothing in this section or in section 545(b)(2), 556(b)(2),
642(c), 2055, 2106(a)(2), or 2522 shall be construed to allow a
deduction, and no deduction shall be allowed, for any transfer
to or for the use of an organization described in subsection
(c) if in connection with such transfer -
(i) the organization directly or indirectly pays, or has
previously paid, any premium on any personal benefit contract
with respect to the transferor, or
(ii) there is an understanding or expectation that any
person will directly or indirectly pay any premium on any
personal benefit contract with respect to the transferor.
(B) Personal benefit contract
For purposes of subparagraph (A), the term "personal benefit
contract" means, with respect to the transferor, any life
insurance, annuity, or endowment contract if any direct or
indirect beneficiary under such contract is the transferor, any
member of the transferor's family, or any other person (other
than an organization described in subsection (c)) designated by
the transferor.
(C) Application to charitable remainder trusts
In the case of a transfer to a trust referred to in
subparagraph (E), references in subparagraphs (A) and (F) to an
organization described in subsection (c) shall be treated as a
reference to such trust.
(D) Exception for certain annuity contracts
If, in connection with a transfer to or for the use of an
organization described in subsection (c), such organization
incurs an obligation to pay a charitable gift annuity (as
defined in section 501(m)) and such organization purchases any
annuity contract to fund such obligation, persons receiving
payments under the charitable gift annuity shall not be treated
for purposes of subparagraph (B) as indirect beneficiaries
under such contract if -
(i) such organization possesses all of the incidents of
ownership under such contract,
(ii) such organization is entitled to all the payments
under such contract, and
(iii) the timing and amount of payments under such contract
are substantially the same as the timing and amount of
payments to each such person under such obligation (as such
obligation is in effect at the time of such transfer).
(E) Exception for certain contracts held by charitable
remainder trusts
A person shall not be treated for purposes of subparagraph
(B) as an indirect beneficiary under any life insurance,
annuity, or endowment contract held by a charitable remainder
annuity trust or a charitable remainder unitrust (as defined in
section 664(d)) solely by reason of being entitled to any
payment referred to in paragraph (1)(A) or (2)(A) of section
664(d) if -
(i) such trust possesses all of the incidents of ownership
under such contract, and
(ii) such trust is entitled to all the payments under such
contract.
(F) Excise tax on premiums paid
(i) In general
There is hereby imposed on any organization described in
subsection (c) an excise tax equal to the premiums paid by
such organization on any life insurance, annuity, or
endowment contract if the payment of premiums on such
contract is in connection with a transfer for which a
deduction is not allowable under subparagraph (A), determined
without regard to when such transfer is made.
(ii) Payments by other persons
For purposes of clause (i), payments made by any other
person pursuant to an understanding or expectation referred
to in subparagraph (A) shall be treated as made by the
organization.
(iii) Reporting
Any organization on which tax is imposed by clause (i) with
respect to any premium shall file an annual return which
includes -
(I) the amount of such premiums paid during the year and
the name and TIN of each beneficiary under the contract to
which the premium relates, and
(II) such other information as the Secretary may require.
The penalties applicable to returns required under section
6033 shall apply to returns required under this clause.
Returns required under this clause shall be furnished at such
time and in such manner as the Secretary shall by forms or
regulations require.
(iv) Certain rules to apply
The tax imposed by this subparagraph shall be treated as
imposed by chapter 42 for purposes of this title other than
subchapter B of chapter 42.
(G) Special rule where State requires specification of
charitable gift annuitant in contract
In the case of an obligation to pay a charitable gift annuity
referred to in subparagraph (D) which is entered into under the
laws of a State which requires, in order for the charitable
gift annuity to be exempt from insurance regulation by such
State, that each beneficiary under the charitable gift annuity
be named as a beneficiary under an annuity contract issued by
an insurance company authorized to transact business in such
State, the requirements of clauses (i) and (ii) of subparagraph
(D) shall be treated as met if -
(i) such State law requirement was in effect on February 8,
1999,
(ii) each such beneficiary under the charitable gift
annuity is a bona fide resident of such State at the time the
obligation to pay a charitable gift annuity is entered into,
and
(iii) the only persons entitled to payments under such
contract are persons entitled to payments as beneficiaries
under such obligation on the date such obligation is entered
into.
(H) Member of family
For purposes of this paragraph, an individual's family
consists of the individual's grandparents, the grandparents of
such individual's spouse, the lineal descendants of such
grandparents, and any spouse of such a lineal descendant.
(I) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this
paragraph, including regulations to prevent the avoidance of
such purposes.
(g) Amounts paid to maintain certain students as members of
taxpayer's household
(1) In general
Subject to the limitations provided by paragraph (2), amounts
paid by the taxpayer to maintain an individual (other than a
dependent, as defined in section 152, or a relative of the
taxpayer) as a member of his household during the period that
such individual is -
(A) a member of the taxpayer's household under a written
agreement between the taxpayer and an organization described in
paragraph (2), (3), or (4) of subsection (c) to implement a
program of the organization to provide educational
opportunities for pupils or students in private homes, and
(B) a full-time pupil or student in the twelfth or any lower
grade at an educational organization described in section
170(b)(1)(A)(ii) located in the United States,
shall be treated as amounts paid for the use of the organization.
(2) Limitations
(A) Amount
Paragraph (1) shall apply to amounts paid within the taxable
year only to the extent that such amounts do not exceed $50
multiplied by the number of full calendar months during the
taxable year which fall within the period described in
paragraph (1). For purposes of the preceding sentence, if 15 or
more days of a calendar month fall within such period such
month shall be considered as a full calendar month.
(B) Compensation or reimbursement
Paragraph (1) shall not apply to any amount paid by the
taxpayer within the taxable year if the taxpayer receives any
money or other property as compensation or reimbursement for
maintaining the individual in his household during the period
described in paragraph (1).
(3) Relative defined
For purposes of paragraph (1), the term "relative of the
taxpayer" means an individual who, with respect to the taxpayer,
bears any of the relationships described in paragraphs (1)
through (8) of section 152(a).
(4) No other amount allowed as deduction
No deduction shall be allowed under subsection (a) for any
amount paid by a taxpayer to maintain an individual as a member
of his household under a program described in paragraph (1)(A)
except as provided in this subsection.
(h) Qualified conservation contribution
(1) In general
For purposes of subsection (f)(3)(B)(iii), the term "qualified
conservation contribution" means a contribution -
(A) of a qualified real property interest,
(B) to a qualified organization,
(C) exclusively for conservation purposes.
(2) Qualified real property interest
For purposes of this subsection, the term "qualified real
property interest" means any of the following interests in real
property:
(A) the entire interest of the donor other than a qualified
mineral interest,
(B) a remainder interest, and
(C) a restriction (granted in perpetuity) on the use which
may be made of the real property.
(3) Qualified organization
For purposes of paragraph (1), the term "qualified
organization" means an organization which -
(A) is described in clause (v) or (vi) of subsection
(b)(1)(A), or
(B) is described in section 501(c)(3) and -
(i) meets the requirements of section 509(a)(2), or
(ii) meets the requirements of section 509(a)(3) and is
controlled by an organization described in subparagraph (A)
or in clause (i) of this subparagraph.
(4) Conservation purpose defined
(A) In general
For purposes of this subsection, the term "conservation
purpose" means -
(i) the preservation of land areas for outdoor recreation
by, or the education of, the general public,
(ii) the protection of a relatively natural habitat of
fish, wildlife, or plants, or similar ecosystem,
(iii) the preservation of open space (including farmland
and forest land) where such preservation is -
(I) for the scenic enjoyment of the general public, or
(II) pursuant to a clearly delineated Federal, State, or
local governmental conservation policy,
and will yield a significant public benefit, or
(iv) the preservation of an historically important land
area or a certified historic structure.
(B) Certified historic structure
For purposes of subparagraph (A)(iv), the term "certified
historic structure" means any building, structure, or land area
which -
(i) is listed in the National Register, or
(ii) is located in a registered historic district (as
defined in section 47(c)(3)(B)) and is certified by the
Secretary of the Interior to the Secretary as being of
historic significance to the district.
A building, structure, or land area satisfies the preceding
sentence if it satisfies such sentence either at the time of the
transfer or on the due date (including extensions) for filing the
transferor's return under this chapter for the taxable year in
which the transfer is made.
(5) Exclusively for conservation purposes
For purposes of this subsection -
(A) Conservation purpose must be protected
A contribution shall not be treated as exclusively for
conservation purposes unless the conservation purpose is
protected in perpetuity.
(B) No surface mining permitted
(i) In general
Except as provided in clause (ii), in the case of a
contribution of any interest where there is a retention of a
qualified mineral interest, subparagraph (A) shall not be
treated as met if at any time there may be extraction or
removal of minerals by any surface mining method.
(ii) Special rule
With respect to any contribution of property in which the
ownership of the surface estate and mineral interests has
been and remains separated, subparagraph (A) shall be treated
as met if the probability of surface mining occurring on such
property is so remote as to be negligible.
(6) Qualified mineral interest
For purposes of this subsection, the term "qualified mineral
interest" means -
(A) subsurface oil, gas, or other minerals, and
(B) the right to access to such minerals.
(i) Standard mileage rate for use of passenger automobile
For purposes of computing the deduction under this section for
use of a passenger automobile, the standard mileage rate shall be
14 cents per mile.
(j) Denial of deduction for certain travel expenses
No deduction shall be allowed under this section for traveling
expenses (including amounts expended for meals and lodging) while
away from home, whether paid directly or by reimbursement, unless
there is no significant element of personal pleasure, recreation,
or vacation in such travel.
(k) Disallowance of deductions in certain cases
For disallowance of deductions for contributions to or for
the use of communist controlled organizations, see section
11(a) (!2) of the Internal Security Act of 1950 (50 U.S.C.
790).
(l) Treatment of certain amounts paid to or for the benefit of
institutions of higher education
(1) In general
For purposes of this section, 80 percent of any amount
described in paragraph (2) shall be treated as a charitable
contribution.
(2) Amount described
For purposes of paragraph (1), an amount is described in this
paragraph if -
(A) the amount is paid by the taxpayer to or for the benefit
of an educational organization -
(i) which is described in subsection (b)(1)(A)(ii), and
(ii) which is an institution of higher education (as
defined in section 3304(f)), and
(B) such amount would be allowable as a deduction under this
section but for the fact that the taxpayer receives (directly
or indirectly) as a result of paying such amount the right to
purchase tickets for seating at an athletic event in an
athletic stadium of such institution.
If any portion of a payment is for the purchase of such tickets,
such portion and the remaining portion (if any) of such payment
shall be treated as separate amounts for purposes of this
subsection.
(m) Other cross references
(1) For treatment of certain organizations providing child
care, see section 501(k).
(2) For charitable contributions of estates and trusts, see
section 642(c).
(3) For nondeductibility of contributions by common trust
funds, see section 584.
(4) For charitable contributions of partners, see section
702.
(5) For charitable contributions of nonresident aliens, see
section 873.
(6) For treatment of gifts for benefit of or use in
connection with the Naval Academy as gifts to or for use of the
United States, see section 6973 of title 10, United States
Code.
(7) For treatment of gifts accepted by the Secretary of
State, the Director of the International Communication Agency,
or the Director of the United States International Development
Cooperation Agency, as gifts to or for the use of the United
States, see section 25 of the State Department Basic
Authorities Act of 1956.
(8) For treatment of gifts of money accepted by the Attorney
General for credit to the "Commissary Funds Federal Prisons" as
gifts to or for the use of the United States, see section 4043
of title 18, United States Code.
(9) For charitable contributions to or for the use of Indian
tribal governments (or their subdivisions), see section 7871.
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