Individual’s charitable contribution to a public charity

  • The charitable contribution deduction ("CCD") for a contribution of money (or ordinary income or short-term capital gain property) to a Sec. 170(b)(1)(A) organization (e.g., public charity, operating foundation, distributing foundation) is limited to 50% of the individual’s "contribution base" (defined as AGI less any NOL carryback to the taxable year).  Sec. 170(b)(1)(A).
  • The CCD for a contribution of long-term capital gain property to a Sec. 170(b)(1)(A) organization is limited to the lesser of (i) 30% of the individual’s contribution base, or (ii) 50% of the individual’s contribution base less the appreciation element.  See Sec. 170(b)(1)(B) and (C).  Alternatively, the individual may elect application of the 50% limitation in exchange for reducing the appreciation element of the long-term capital gain property (e.g., deduction for basis rather than fair market value).  Sec. 170(b)(1)(C).

  Individual’s charitable contribution to a private foundation

  • The CCD for a contribution of money to an organization other than a Sec. 170(b)(1)(A) organization (e.g., private foundation) is limited to 30% of the individual’s contribution base.  Sec. 170(b)(1)(B).
  • The CCD for a contribution of long-term capital gain property to an organization other than a Sec. 170(b)(1)(A) organization is generally limited to 20% of the individual’s contribution base.  Sec. 170(b)(1)(D).

  Individual’s charitable contribution for the use of a public charity or private foundation

  • The CCD for a contribution of money for the use of a public charity or private foundation is generally limited to 30% of the individual’s contribution base.  Sec. 170(b)(1)(B).

  Corporation’s charitable contribution

  • The CCD for a contribution from a corporation is generally limited to 10% of the corporation’s pretax net income (computed without regard to any NOL or capital loss carryback to the taxable year).  Sec. 170(b)(2).

Combinations of contributions

  • First, deduct contributions to a public charity before contributions to a private foundation.
  • Second, deduct contributions of money before contributions of capital gain.

Carryovers

  • Generally, excess contributions may be carried over for the next 5 years.
  • The amount of excess contributions falling under the 50% limitation to be carried forward from the contribution year may not exceed the lesser of (i) the available deduction left under the 50% limitation for the succeeding year, or (ii) the amount of excess contributions from the contribution year not previously applied.
  • The amount of excess contributions falling under the 30% limitation to be carried forward from the contribution year may not exceed the lesser of (i) the available deduction left under the 30% limitation for the succeeding year, (ii) the available deduction left under the 50% limitation for the succeeding year, or (iii) the amount of excess contributions from the contribution year not previously applied.
  • If a carryover of an individual’s contribution of capital gain property (subject to 30% limitation) is applied in the taxable year in which the 50% election is made, the amount of contributions in each preceding year must be revised as if the deduction reduction rule (i.e., to 50% of basis) applied to them in the preceding year, and must be carried over to the taxable year and successive years as contributions of property other than capital gain property (this may result in wiping out the carryover from the preceding year).

Other considerations

  • Is the standard deduction greater than all itemized deductions, including charitable contribution deductions?
  • Will IRC Section 68, Overall Limitation on Itemized Deductions, reduce the availability of charitable contribution deductions?
         * If the individual’s AGI exceeds the "applicable amount" (currently, $145,950), the amount of itemized deductions otherwise allowable shall be reduced by the lesser of (1) 3% of the excess of AGI over the applicable amount, or (2) 80% of the amount of the itemized deductions otherwise allowable.

Comments

  1. Dillman Cothren says:

    I have a particular question on contributions to a church that has a 50%limitation. If you have a carryover in 2004 and do not itemize in 2005, what kind of computing is necessary to be performed before you are able to use the carryover on your 2006 tax return? can you please give me the “formula” to calculate? i would also like a reference to this “formula”. thanks!