Most gifts or contributions for public and
charitable purposes, regardless of the amount, qualify for the estate and
gift tax charitable deduction [IRC §2522 and §2055]. Deductible
charitable contributions are similar to those allowed as income tax deductions,
however: (1) contributions to charitable organizations outside the U.S.
are generally deductible, and (2) the deduction is not limited by the
donor’s income. Gifts to lodges, fraternal orders, veterans
organizations, and amateur sports organizations must meet specific
requirements in order to be deductible. Gifts to foreign governments
generally do not qualify for charitable deductions. Gifts that fully qualify
as charitable deductions do
not need to be reported on a gift tax return if (1) the donor’s entire
interest in the property was donated, and (2) the donor did not previously
give an interest in the same property to a noncharity [IRC §6019]. Gifts
of partial interests must be reported unless the interest qualifies as a
conservation easement under IRC §2522(d). Transfers at death must be
reported on the estate tax return but are generally fully deductible as
charitable deductions.
Partial Interests: A gift of a
remainder or other partial interest can only be deducted as a charitable
deduction if it is one of the
following:
• An undivided portion of an entire
interest extending over the entire term of ownership of the property,
including all rights owned by the donor.
• Outright remainder in a personal
residence or farm. Other remainder interests must be in trust.
• Qualified conservation contribution
defined in IRC §170(h) and §2055(f). TRA ’97 added an additional
estate tax exclusion of up to 40% of the value of land subject to a
qualified conservation easement. [IRC §2031(c)]
• Charitable remainder trust defined in
IRC §664(d).
• Pooled income fund.
• Charitable lead trust or guaranteed
lead payments.
