Bases also reduced by in-kind gift to charity
Article Abstract:
Revenue Ruling 96-11 indicates that the contribution of a partnership to charity necessitated a reduction in the bases of the interests of the partners equal to the property's basis. The charitable contribution deduction in this case is not recognized in the calculation of the partnership income but is considered independently by each partner under Sec. 702(a)(4). The contribution permanently lowered the basis in the assets of the partnership without having its income affected. The partners thus would receive the benefit of the partnership's basis in the contributed property a second time once they do away with their interests, unless the partners' bases in their interests were reduced. The IRS therefore opined that the permanent drop in the partnership's basis was the partnership's expenditure that is not deductible in its taxable income and not chargeable to capital amount, requiring a cut in the partner's basis.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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Final rules explain substantiating charitable gifts
Article Abstract:
Final Regulations (TD 8690, 12/13/96) have been issued to clarify the substantiation requirements for charitable contributions of $250 or more. They also explain the disclosure rules for contributions of more than $75 for which the donor receives something in return. Reg. 1.170A-1(h) cites two conditions that must be met before taxpayers can claim a deduction for any portion of a contribution. They must have planned to make a payment greater than the fair market value of the goods or services, and they must have made this payment. The final Regulations apply to contributions made after Dec. 15, 1996. However, application to contributions made after 1993 is allowed. As for 1994 and 1995 contributions, taxpayers may seek guidance from Proposed Regulations (IA-44-94, 8/3/95).
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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Freezing ranch's development is charitable gift
Article Abstract:
Ltr. Rul. 9632003 provides that the grant of a conservation easement to a charity to guarantee the preservation of the panoramic and ecological qualities of a ranch in perpetuity can be considered as a charitable contribution. In general, Sec. 170(f)(3)(A) rejects a charitable deduction for less than a taxpayer's entire interest property. To gain exemption from this rule, a qualified conservation contribution has to meet three requirements. One is that it is a qualified real property. The second is that the contribution is made to a qualified organization. Finally, the contribution is made only for conservation purposes, which should be observed in perpetuity. The IRS found that the taxpayers' gift satisfied the tests for a qualified conservation contribution.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1996
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