Charitable Giving Law Made Easy

BRUCE R. HOPKINS is the countrya s leading authority on tax--exempt organizations and is a senior partner with the firm Polsinelli Shalton Welte Suelthaus PC. He is the author or coauthor of nineteen books, including The Law of Tax--Exempt Organizations, Eighth Edition (and the forthcoming Ninth Edition); Planning Guide for the Law of Tax--Exempt Organizations; Nonprofit Law Made Easy; 650 Essential Nonprofit Law Questions Answered; The Law of Fundraising, Third Edition; Private Foundations: Tax Law and Compliance, Second Edition; The Tax Law of Charitable Giving, Third Edition; The Law of Intermediate Sanctions; and The Law of Tax--Exempt Healthcare Organizations, Second Edition, as well as the newsletter Bruce R. Hopkinsa Nonprofit Counsel, all published by Wiley.

• Preface ixAbout the Author xiChapter 1 Charitable Giving Law: Basic Concepts 1Charitable Organizations 2Charitable Contributions 2Introduction to Charitable Deductions 4Private Foundations 5Public Charities 5What Difference Does It Make? 10Types of Donors 10Factors Affecting Deductibility of Contributions 11Grantor Trust Rules 12Donor-Advised Funds 12Charitable Giving Subtleties 14Charitable Pledges 18Public Policy Considerations 18Some Statistics 21Summary 22Chapter 2 Contributions of Money and Property 23Contributions of Money 23Nature of Property 24Contributions of Property in General 25Contributions of Long-Term Capital Gain Property in General 27Contributions of Ordinary Income Property 27Certain Contributions of Capital Gain Property 31Contributions of Property for Unrelated Use 33Step Transaction Doctrine 35Valuation of Property 41Summary 44Chapter 3 Timing of Charitable Deductions 45Overview 46Contributions of Money in General 47Contributions of Money by Check 47Contributions by Debit or Credit Card 48Contributions of Money by Telephone 49Contributions of Securities 49Contributions of Copyright Interests 52Contributions by Means of Notes 52Contributions by Letters of Credit 53Contributions of Property Subject to Option 53Contributions of Credit Card Rebates 56Contributions of Tangible Personal Property 57Contributions of Real Property 57Timing Set by Statute 57Contributions by Corporations 58Contributions by Partnerships 59Contributions by Means of the Internet 61Summary 62Chapter 4 Percentage Limitations on Charitable Deductions 63Introduction 63Individuals’ Contribution Base 66Corporations’ Taxable Income 67Overview of Percentage Limitations 6750 Percent Limitation 6930 Percent Limitation for Gifts of Certain Property 71Electable 50 Percent Limitation 74General 30 Percent Limitation 78Interplay of 50 Percent/Special 30 Percent Limitations 79Interplay of 50 Percent/General 30 Percent Limitations 79Interplay of Special 30 Percent/General 30 Percent Limitations 8020 Percent Limitation 80Contributions for Use of Charity 81Blending Percentage Limitations 81Individuals’ Net Operating Loss Carryovers and Carrybacks 83Rules for Spouses 84Information Requirements 86Percentage Limitation for Corporations 87Corporations’ Net Operating Loss Carryovers and Carrybacks 88Illustrations 89Summary 91Chapter 5 Estate and Gift Tax Considerations 92Introduction to Taxes 92Federal Gift Tax 94Federal Estate Tax 103Unification of Taxes 110Estate Planning Principles 111Remainder Interests 119Ascertainability of Charitable Interests 123Generation-Skipping Transfer Tax System 125Summary 128Chapter 6 Special Property Rules 129Works of Art 129Vehicles 131Intellectual Property 135Automobile Expenses 137Inventory 138Scientific Research Property 142Computer Technology or Equipment 142License to Use Patent 143Real Property Used for Conservation Purposes 145S Corporation Stock 149Use of Property 154Property Subject to Debt 154Future Interests in Tangible Personal Property 157Summary 158Chapter 7 Unique Charitable Gift Situations 159Contributions from Retirement Accounts 159Donors’ Creations 160Charity Auctions 161Services 167Unreimbursed Expenses 168Limit on Deduction Due to Pleasure 172Bargain Sales 176Contributions by Trusts 180Partial Interests 186Charitable Family Limited Partnerships 189Foreign Tax Credit 191Summary 192Chapter 8 Other Aspects of Deductible Giving 193Contributions by Means of Agent 194Gifts for the Use of Charity 195Conditional Gifts 197Earmarking of Gifts for Individuals 200Deduction Reduction Rules 204Twice-Basis Deductions 204Alternative Minimum Tax Considerations 205Business Expense Deduction 207Lobbying Activities 207Corporate Sponsorships 208Gifts to Noncharitable Organizations 212Reallocation of Deductions 214Funding of Terrorism 215Statute of Limitations 215Concept of Trust Income 216Penalties 219Summary 224Chapter 9 Planned Giving 225Introduction 225Charitable Remainder Trusts 228Early Termination of Remainder Trusts 234Pooled Income Funds 235Charitable Gift Annuities 238Other Gifts of Remainder Interests 239Charitable Lead Trusts 243Application of Securities Laws 243Application of Antitrust Laws 245Summary 246Chapter 10 Gifts of and Using Life Insurance 247Introduction 247Life Insurance Concepts 248Charitable Giving and Life Insurance 251Insurable Interest 257Unrelated Debt-Financed Income Considerations 261Charitable Split-Dollar Insurance Plans 261Summary 269Chapter 11 International Charitable Giving 270Introduction 270Background 271Earmarking and Conduit Restrictions 273Control over Foreign Donees 276Income Tax Treaties 280Estate and Gift Tax Considerations 281Estate Tax Rules 281Gift Tax Rules 286Charitable Giving by Noncitizen Nonresidents 287Corporate Gifts to U.S. Charity for Overseas Use 288Gifts of Goods or Services to Benefit Foreign Charity 289Grants of Funds from U.S. Corporation–Related Foundations to Foreign Charity 290Summary 299Chapter 12 Administration of Charitable Giving Programs 300Burden of Proof Rules 300Gift Substantiation Requirements 301Disclosure of Gifts of Property 307Dispositions of Contributed Property 309Appraisal Requirements 310Offering of Information or Services 315Tax Shelters 315Quid Pro Quo Contribution Rules 317Disclosure by Noncharitable Organizations 320State Fundraising Regulation 323Summary 336Glossary 337Epilogue 339Index 352