For this purpose, depreciable property and real property used in a trade or business are treated as a capital asset, except for that portion of the gain that is treated as ordinary income under certain recharacterization provisions (Regs. The charitable contribution deduction for property is reduced by the gain that would not have been long-term capital gain had the property been sold at its FMV (Sec. The first step is to determine the fair market value (FMV) of the property. 1.170A-1(g)).Ĭharitable contributions of property require additional computations to calculate the deductible amount. No charitable deduction is allowed for the contribution of services, although unreimbursed expenditures made in the course of performing services for a charitable organization may constitute deductible contributions (Regs. And a recent change in the law makes it easier for taxpayers to claim charitable deductions for food products donated to charity (Section 113 of the Protecting Americans From Tax Hikes Act (PATH), P.L. 170(a)(2)).Ĭharitable contributions of food are given special treatment in the Code (Sec. 170(a)(1)).Ī corporation reporting taxable income on the accrual method is allowed to elect a charitable contribution deduction if the board of directors authorizes the contribution during the year and the contribution is made on or before the 15th day of the fourth month following the close of the year (Sec. The present Code provides a deduction for charitable contributions made within the tax year (Sec. The original charitable contribution deduction was enacted in the War Revenue Act of 1917, P.L. In the early years of the income tax, private philanthropy was encouraged by the inclusion of a charitable contribution deduction in the Internal Revenue Code.
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