(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).
(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 (determined without regard to section
1221 (b)(3)) 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
(I) 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) which is applicable property (as defined in paragraph (7)(C), but without regard to clause (ii) thereof) which is sold, exchanged, or otherwise disposed of by the donee before the last day of the taxable year in which the contribution was made and with respect to which the donee has not made a certification in accordance with paragraph (7)(D),
(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)(F),
(iii) of any patent, copyright (other than a copyright described in section
1221 (a)(3) or
1231 (b)(1)(C)), trademark, trade name, trade secret, know-how, software (other than software described in section
197 (e)(3)(A)(i)), or similar property, or applications or registrations of such property, or
(iv) of any taxidermy property which is contributed by the person who prepared, stuffed, or mounted the property or by any person who paid or incurred the cost of such preparation, stuffing, or mounting, 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 taxpayers entire interest in the property contributed, the taxpayers 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) Special rule for contributions of food inventory
(i) General rule In the case of a charitable contribution of food from any trade or business of the taxpayer, this paragraph shall be applied
(I) without regard to whether the contribution is made by a C corporation, and
(II) only to food that is apparently wholesome food.
(ii) Limitation In the case of a taxpayer other than a C corporation, the aggregate amount of such contributions for any taxable year which may be taken into account under this section shall not exceed 10 percent of the taxpayers aggregate net income for such taxable year from all trades or businesses from which such contributions were made for such year, computed without regard to this section.
(iii) Apparently wholesome food For purposes of this subparagraph, the term apparently wholesome food has the meaning given to such term by section 22(b)(2) of the Bill Emerson Good Samaritan Food Donation Act (
42 U.S.C.
1791 (b)(2)), as in effect on the date of the enactment of this subparagraph.
(iv) Termination This subparagraph shall not apply to contributions made after December 31, 2007.
(D) Special rule for contributions of book inventory to public schools
(i) Contributions of book inventory In determining whether a qualified book contribution is a qualified contribution, subparagraph (A) shall be applied without regard to whether the donee is an organization described in the matter preceding clause (i) of subparagraph (A).
(ii) Qualified book contribution For purposes of this paragraph, the term qualified book contribution means a charitable contribution of books to a
school">public
school which is an educational organization described in subsection (b)(1)(A)(ii) and which provides elementary education or secondary education (kindergarten through grade 12).
(iii) Certification by donee Subparagraph (A) shall not apply to any contribution unless (in addition to the certifications required by subparagraph (A) (as modified by this subparagraph)), the donee certifies in writing that
(I) the books are suitable, in terms of currency, content, and quantity, for use in the donees educational programs, and
(II) the donee will use the books in its educational programs.
(iv) Termination This subparagraph shall not apply to contributions made after December 31, 2007.
(E) 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 or assembled by the taxpayer,
(iii) the contribution is made not later than 2 years after the date the construction or assembly 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 taxpayers 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))),
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 or assembled by the taxpayer, the date the construction or assembling 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 donees education plan,
(vii) the donees 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 or assembled 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 or assembly 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, 2007.
(7) Recapture of deduction on certain dispositions of exempt use property
(A) In general In the case of an applicable disposition of applicable property, there shall be included in the income of the
donor of such property for the taxable year of such
donor in which the applicable disposition occurs an amount equal to the excess (if any) of
(i) the amount of the deduction allowed to the
donor under this section with respect to such property, over
(ii) the donors basis in such property at the time such property was contributed.
(B) Applicable disposition For purposes of this paragraph, the term applicable disposition means any sale, exchange, or other disposition by the donee of applicable property
(i) after the last day of the taxable year of the
donor in which such property was contributed, and
(ii) before the last day of the 3-year period beginning on the date of the contribution of such property,
unless the donee makes a certification in accordance with subparagraph (D).
(C) Applicable property For purposes of this paragraph, the term applicable property means charitable deduction property (as defined in section
6050L (a)(2)(A))
(i) which is tangible personal property the use of which is identified by the donee as related to the purpose or function constituting the basis of the donees exemption under section
501, and
(ii) for which a deduction in excess of the donors basis is allowed.
(D) Certification A certification meets the requirements of this subparagraph if it is a written statement which is signed under penalty of perjury by an officer of the donee organization and
(i) which
(I) certifies that the use of the property by the donee was substantial and related to the purpose or function constituting the basis for the donees exemption under section
501, and
(II) describes how the property was used and how such use furthered such purpose or function, or
(ii) which
(I) states the intended use of the property by the donee at the time of the contribution, and
(II) certifies that such intended use has become impossible or infeasible to implement.
(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 taxpayers 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 taxpayers 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 taxpayers 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 taxpayers 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 donors 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),
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 transferors 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 individuals family consists of the individuals grandparents, the grandparents of such individuals 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.
(11) Qualified appraisal and other documentation for certain contributions
(A) In general
(i) Denial of deduction In the case of an individual, partnership, or corporation, no deduction shall be allowed under subsection (a) for any contribution of property for which a deduction of more than $500 is claimed unless such person meets the requirements of subparagraphs (B), (C), and (D), as the case may be, with respect to such contribution.
(ii) Exceptions
(I) Readily valued property Subparagraphs (C) and (D) shall not apply to cash, property described in subsection (e)(1)(B)(iii) or section
1221 (a)(1), publicly traded securities (as defined in section
6050L (a)(2)(B)), and any qualified vehicle described in paragraph (12)(A)(ii) for which an acknowledgement under paragraph (12)(B)(iii) is provided.
(II) Reasonable cause Clause (i) shall not apply if it is shown that the failure to meet such requirements is due to reasonable cause and not to willful neglect.
(B) Property description for contributions of more than $500
In the case of contributions of property for which a deduction of more than $500 is claimed, the requirements of this subparagraph are met if the individual, partnership or corporation includes with the return for the taxable year in which the contribution is made a description of such property and such other information as the Secretary may require. The requirements of this subparagraph shall not apply to a C corporation which is not a personal service corporation or a closely held C corporation.
(C) Qualified appraisal for contributions of more than $5,000
In the case of contributions of property for which a deduction of more than $5,000 is claimed, the requirements of this subparagraph are met if the individual, partnership, or corporation obtains a qualified appraisal of such property and attaches to the return for the taxable year in which such contribution is made such information regarding such property and such appraisal as the Secretary may require.
(D) Substantiation for contributions of more than $500,000
In the case of contributions of property for which a deduction of more than $500,000 is claimed, the requirements of this subparagraph are met if the individual, partnership, or corporation attaches to the return for the taxable year a qualified appraisal of such property.
(E) Qualified appraisal and appraiser For purposes of this paragraph
(i) Qualified appraisal The term qualified appraisal means, with respect to any property, an appraisal of such property which
(I) is treated for purposes of this paragraph as a qualified appraisal under regulations or other guidance prescribed by the Secretary, and
(II) is conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations or other guidance prescribed under subclause (I).
(ii) Qualified appraiser Except as provided in clause (iii), the term qualified appraiser means an individual who
(I) has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in regulations prescribed by the Secretary,
(II) regularly performs appraisals for which the individual receives compensation, and
(III) meets such other requirements as may be prescribed by the Secretary in regulations or other guidance.
(iii) Specific appraisals An individual shall not be treated as a qualified appraiser with respect to any specific appraisal unless
(I) the individual demonstrates verifiable education and experience in valuing the type of property subject to the appraisal, and
(II) the individual has not been prohibited from practicing before the Internal Revenue Service by the Secretary under section
330 (c) of title
31, United States Code, at any time during the 3-year period ending on the date of the appraisal.
(F) Aggregation of similar items of property
For purposes of determining thresholds under this paragraph, property and all similar items of property donated to 1 or more donees shall be treated as 1 property.
(G) Special rule for pass-thru entities
In the case of a partnership or S corporation, this paragraph shall be applied at the entity level, except that the deduction shall be denied at the partner or shareholder level.
(H) Regulations
The Secretary may 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.
(12) Contributions of used motor vehicles, boats, and airplanes
(A) In general In the case of a contribution of a qualified vehicle the claimed value of which exceeds $500
(i) paragraph (8) shall not apply and no deduction shall be allowed under subsection (a) for such contribution unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgement of the contribution by the donee organization that meets the requirements of subparagraph (B) and includes the acknowledgement with the taxpayers return of tax which includes the deduction, and
(ii) if the organization sells the vehicle without any significant intervening use or material improvement of such vehicle by the organization, the amount of the deduction allowed under subsection (a) shall not exceed the gross proceeds received from such sale.
(B) Content of acknowledgement An acknowledgement meets the requirements of this subparagraph if it includes the following information:
(i) The name and taxpayer identification number of the
donor.
(ii) The vehicle identification number or similar number.
(iii) In the case of a qualified vehicle to which subparagraph (A)(ii) applies
(I) a certification that the vehicle was sold in an arms length transaction between unrelated parties,
(II) the gross proceeds from the sale, and
(III) a statement that the deductible amount may not exceed the amount of such gross proceeds.
(iv) In the case of a qualified vehicle to which subparagraph (A)(ii) does not apply
(I) a certification of the intended use or material improvement of the vehicle and the intended duration of such use, and
(II) a certification that the vehicle would not be transferred in exchange for money, other property, or services before completion of such use or improvement.
(v) Whether the donee organization provided any goods or services in consideration, in whole or in part, for the qualified vehicle.
(vi) A description and good faith estimate of the value of any goods or services referred to in clause (v) or, if such goods or services consist solely of intangible religious benefits (as defined in paragraph (8)(B)), a statement to that effect.
(C) Contemporaneous For purposes of subparagraph (A), an acknowledgement shall be considered to be contemporaneous if the donee organization provides it within 30 days of
(i) the sale of the qualified vehicle, or
(ii) in the case of an acknowledgement including a certification described in subparagraph (B)(iv), the contribution of the qualified vehicle.
(D) Information to Secretary
A donee organization required to provide an acknowledgement under this paragraph shall provide to the Secretary the information contained in the acknowledgement. Such information shall be provided at such time and in such manner as the Secretary may prescribe.
(E) Qualified vehicle For purposes of this paragraph, the term qualified vehicle means any
(i) motor vehicle manufactured primarily for use on public streets, roads, and highways,
(ii) boat, or
(iii) airplane.
Such term shall not include any property which is described in section 1221 (a)(1).
(F) Regulations or other guidance
The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this paragraph. The Secretary may prescribe regulations or other guidance which exempts sales by the donee organization which are in direct furtherance of such organizations charitable purpose from the requirements of subparagraphs (A)(ii) and (B)(iv)(II).
(13) Contributions of certain interests in buildings located in registered historic districts
(A) In general
No deduction shall be allowed with respect to any contribution described in subparagraph (B) unless the taxpayer includes with the return for the taxable year of the contribution a $500 filing fee.
(B) Contribution described
A contribution is described in this subparagraph if such contribution is a qualified conservation contribution (as defined in subsection (h)) which is a restriction with respect to the exterior of a building described in subsection (h)(4)(C)(ii) and for which a deduction is claimed in excess of $10,000.
(C) Dedication of fee
Any fee collected under this paragraph shall be used for the enforcement of the provisions of subsection (h).
(14) Reduction for amounts attributable to rehabilitation credit In the case of any qualified conservation contribution (as defined in subsection (h)), the amount of the deduction allowed under this section shall be reduced by an amount which bears the same ratio to the fair market value of the contribution as
(A) the sum of the credits allowed to the taxpayer under section
47 for the 5 preceding taxable years with respect to any building which is a part of such contribution, bears to
(B) the fair market value of the building on the date of the contribution.
(15) Special rule for taxidermy property
(A) Basis For purposes of this section and notwithstanding section
1012, in the case of a charitable contribution of taxidermy property which is made by the person who prepared, stuffed, or mounted the property or by any person who paid or incurred the cost of such preparation, stuffing, or mounting, only the cost of the preparing, stuffing, or mounting shall be included in the basis of such property.
(B) Taxidermy property For purposes of this section, the term taxidermy property means any work of art which
(i) is the reproduction or preservation of an animal, in whole or in part,
(ii) is prepared, stuffed, or mounted for purposes of recreating one or more characteristics of such animal, and
(iii) contains a part of the body of the dead animal.
(16) Contributions of clothing and household items
(A) In general
In the case of an individual, partnership, or corporation, no deduction shall be allowed under subsection (a) for any contribution of clothing or a household item unless such clothing or household item is in good used condition or better.
(B) Items of minimal value
Notwithstanding subparagraph (A), the Secretary may by regulation deny a deduction under subsection (a) for any contribution of clothing or a household item which has minimal monetary value.
(C) Exception for certain property
Subparagraphs (A) and (B) shall not apply to any contribution of a single item of clothing or a household item for which a deduction of more than $500 is claimed if the taxpayer includes with the taxpayers return a qualified appraisal with respect to the property.
(D) Household items For purposes of this paragraph
(i) In general The term household items includes furniture, furnishings, electronics, appliances, linens, and other similar items.
(ii) Excluded items Such term does not include
(I) food,
(II) paintings, antiques, and other objects of art,
(III) jewelry and gems, and
(IV) collections.
(E) Special rule for pass-thru entities
In the case of a partnership or S corporation, this paragraph shall be applied at the entity level, except that the deduction shall be denied at the partner or shareholder level.
(17) Recordkeeping No deduction shall be allowed under subsection (a) for any contribution of a cash, check, or other monetary gift unless the
donor maintains as a record of such contribution a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution.
(18) Contributions to donor advised funds A deduction otherwise allowed under subsection (a) for any contribution to a
donor advised fund (as defined in section
4966 (d)(2)) shall only be allowed if
(A) the sponsoring organization (as defined in section
4966 (d)(1)) with respect to such
donor advised fund is not
(i) described in paragraph (3), (4), or (5) of subsection (c), or
(ii) a type III supporting organization (as defined in section
4943 (f)(5)(A)) which is not a functionally integrated type III supporting organization (as defined in section
4943 (f)(5)(B)), and
(B) the taxpayer obtains a contemporaneous written acknowledgment (determined under rules similar to the rules of paragraph (8)(C)) from the sponsoring organization (as so defined) of such
donor advised fund that such organization has exclusive legal control over the assets contributed.
(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 (determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), or a relative of the taxpayer) as a member of his household during the period that such individual is
(A) a member of the taxpayers 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 subparagraphs (A) through (G) of section
152 (d)(2).
(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) Special rules with respect to buildings in registered historic districts In the case of any contribution of a qualified real property interest which is a restriction with respect to the exterior of a building described in subparagraph (C)(ii), such contribution shall not be considered to be exclusively for conservation purposes unless
(i) such interest
(I) includes a restriction which preserves the entire exterior of the building (including the front, sides, rear, and height of the building), and
(II) prohibits any change in the exterior of the building which is inconsistent with the historical character of such exterior,
(ii) the
donor and donee enter into a written agreement certifying, under penalty of perjury, that the donee
(I) is a qualified organization (as defined in paragraph (3)) with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and
(II) has the resources to manage and enforce the restriction and a commitment to do so, and
(iii) in the case of any contribution made in a taxable year beginning after the date of the enactment of this subparagraph, the taxpayer includes with the taxpayers return for the taxable year of the contribution
(I) a qualified appraisal (within the meaning of subsection (f)(11)(E)) of the qualified property interest,
(II) photographs of the entire exterior of the building, and
(III) a description of all restrictions on the development of the building.
(C) Certified historic structure For purposes of subparagraph (A)(iv), the term certified historic structure means
(i) any building, structure, or land area which is listed in the National Register, or
(ii) any building which 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 transferors 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.
(m) Certain donee income from intellectual property treated as an additional charitable contribution
(1) Treatment as additional contribution
In the case of a taxpayer who makes a qualified intellectual property contribution, the deduction allowed under subsection (a) for each taxable year of the taxpayer ending on or after the date of such contribution shall be increased (subject to the limitations under subsection (b)) by the applicable percentage of qualified donee income with respect to such contribution which is properly allocable to such year under this subsection.
(2) Reduction in additional deductions to extent of initial deduction
With respect to any qualified intellectual property contribution, the deduction allowed under subsection (a) shall be increased under paragraph (1) only to the extent that the aggregate amount of such increases with respect to such contribution exceed the amount allowed as a deduction under subsection (a) with respect to such contribution determined without regard to this subsection.
(3) Qualified donee income
For purposes of this subsection, the term qualified donee income means any net income received by or accrued to the donee which is properly allocable to the qualified intellectual property.
(4) Allocation of qualified donee income to taxable years of donor For purposes of this subsection, qualified donee income shall be treated as properly allocable to a taxable year of the
donor if such income is received by or accrued to the donee for the taxable year of the donee which ends within or with such taxable year of the
donor.
(5) 10-year limitation
Income shall not be treated as properly allocable to qualified intellectual property for purposes of this subsection if such income is received by or accrued to the donee after the 10-year period beginning on the date of the contribution of such property.
(6) Benefit limited to life of intellectual property
Income shall not be treated as properly allocable to qualified intellectual property for purposes of this subsection if such income is received by or accrued to the donee after the expiration of the legal life of such property.
(7) Applicable percentage For purposes of this subsection, the term applicable percentage means the percentage determined under the following table which corresponds to a taxable year of the
donor ending on or after the date of the qualified intellectual property contribution:
(8) Qualified intellectual property contribution For purposes of this subsection, the term qualified intellectual property contribution means any charitable contribution of qualified intellectual property
(A) the amount of which taken into account under this section is reduced by reason of subsection (e)(1), and
(B) with respect to which the
donor informs the donee at the time of such contribution that the
donor intends to treat such contribution as a qualified intellectual property contribution for purposes of this subsection and section
6050L.
(9) Qualified intellectual property
For purposes of this subsection, the term qualified intellectual property means property described in subsection (e)(1)(B)(iii) (other than property contributed to or for the use of an organization described in subsection (e)(1)(B)(ii)).
(10) Other special rules
(A) Application of limitations on charitable contributions
Any increase under this subsection of the deduction provided under subsection (a) shall be treated for purposes of subsection (b) as a deduction which is attributable to a charitable contribution to the donee to which such increase relates.
(B) Net income determined by donee The net income taken into account under paragraph (3) shall not exceed the amount of such income reported under section
6050L (b)(1).
(C) Deduction limited to 12 taxable years Except as may be provided under subparagraph (D)(i), this subsection shall not apply with respect to any qualified intellectual property contribution for any taxable year of the
donor after the 12th taxable year of the
donor which ends on or after the date of such contribution.
(D) Regulations The Secretary may issue regulations or other guidance to carry out the purposes of this subsection, including regulations or guidance
(i) modifying the application of this subsection in the case of a
donor or donee with a short taxable year, and
(ii) providing for the determination of an amount to be treated as net income of the donee which is properly allocable to qualified intellectual property in the case of a donee who uses such property to further a purpose or function constituting the basis of the donees exemption under section
501 (or, in the case of a governmental unit, any purpose described in section
170 (c)) and does not possess a right to receive any payment from a third party with respect to such property.
(n) Expenses paid by certain whaling captains in support of Native Alaskan subsistence whaling
(1) In general
In the case of an individual who is recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities and who engages in such activities during the taxable year, the amount described in paragraph (2) (to the extent such amount does not exceed $10,000 for the taxable year) shall be treated for purposes of this section as a charitable contribution.
(2) Amount described
(A) In general
The amount described in this paragraph is the aggregate of the reasonable and necessary whaling expenses paid by the taxpayer during the taxable year in carrying out sanctioned whaling activities.
(B) Whaling expenses For purposes of subparagraph (A), the term whaling expenses includes expenses for
(i) the acquisition and maintenance of whaling boats, weapons, and gear used in sanctioned whaling activities,
(ii) the supplying of food for the crew and other provisions for carrying out such activities, and
(iii) storage and distribution of the catch from such activities.
(3) Sanctioned whaling activities
For purposes of this subsection, the term sanctioned whaling activities means subsistence bowhead whale hunting activities conducted pursuant to the management plan of the Alaska Eskimo Whaling Commission.
(4) Substantiation of expenses
The Secretary shall issue guidance requiring that the taxpayer substantiate the whaling expenses for which a deduction is claimed under this subsection, including by maintaining appropriate written records with respect to the time, place, date, amount, and nature of the expense, as well as the taxpayers eligibility for such deduction, and that (to the extent provided by the Secretary) such substantiation be provided as part of the taxpayers return of tax.
(p) 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.
