The Tax Law of Charitable Giving

Bruce R. Hopkins

• Publisher: Wiley
• Year: 2021
• ISBN:
  9781119756026
• Edition: 6
• Topic: Persönliche Entwicklung
• Subtopic: Verhandlungen

the tax law of charitable giving

Discover a fully updated and comprehensive reference on US charitable tax law from a leading authority

As United States charitable tax law becomes ever more complex and byzantine, the need for a one-stop resource on foundational and advanced topics in this practice area has become acute. The comprehensively revised Sixth Edition of The Tax Law of Charitable Giving fills this niche. The book offers readers a fulsome, authoritative, and well-organized description of modern US tax laws on charitable giving

Ranging over the basics of US charitable giving law to the intricate details of contributions of various types of property and international giving, this accomplished nonprofit lawyer, professor, and author delves deeply into a wide variety of subjects concerning deductible (and nondeductible) charitable giving. In addition to fundamental topics such as the definition of gift and percentage limitations on charitable deductions, readers will learn about planned giving, donor-advised funds, the substantiation and appraisal requirements, reporting and disclosure laws, valuation pricinples, tax penalties, and more.

Ideal for lawyers, accountants, and other financial professionals who advise clients on charitable giving and tax matters, The Tax Law of Charitable Giving provides an authoritative reference on all aspects of philanthropy and federal tax law.

PART ONE
Introduction to the Tax Law of Charitable Giving

CHAPTER ONE
Charitable Giving Law: Basic Concepts

• § 1.1 Introduction to Charitable Contribution Deduction
• § 1.2 Defining Tax-Exempt Organizations
• § 1.3 Charitable Organizations Law Philosophy
  • (a) Public Policy and National Heritage
  • (b) Other Rationales
  • (c) Freedom of Association
• § 1.4 Statistical Profile of Charitable Sector
• § 1.5 History of Charitable Contribution Deduction
• § 1.6 Charitable Contribution Deduction Reform Proposals

The purpose of this book is to summarize and analyze the law of charitable giving. For the most part, this law consists of federal tax law requirements, although state law can be implicated. The law of charitable giving frequently interrelates with the laws concerning tax-exempt status and public charity/private foundation classification of charitable organizations.

§ 1.1 INTRODUCTION TO CHARITABLE CONTRIBUTION DEDUCTION

The charitable contribution is the subject of extensive law. On the face of it, a charitable gift is a rather simple matter, requiring merely a gift and a charitable recipient. Though these elements are crucial (and are discussed throughout these pages), they by no means constitute the whole of the subject. Far more is involved in determining the availability and amount of the charitable contribution deduction.

There are, in fact, several charitable contribution deductions in American law, including three at the federal level: one for the income tax, one for the estate tax, and one for the gift tax. Most states have at least one form of charitable deduction, as do many counties and cities.

The principal charitable contribution deduction is the one that is part of the federal income tax system. A charitable contribution paid during a tax year generally is allowable as a deduction in computing taxable income for federal income tax purposes. This deduction is allowable irrespective of either the method of accounting employed or the date on which the contribution may have been pledged.

The federal income tax charitable contribution deduction is available to both individuals and corporations. In both instances, the amount deductible may depend on a variety of conditions and limitations. These elements of the law of charitable giving are the subject of much of this book. The federal gift and estate tax charitable contribution deductions are also discussed.

An income tax charitable deduction may be available for gifts of money and of property. This deduction can also be available with respect to outright transfers of money or property to charity, as well as to transfers of partial interests in property.¹ A gift of a partial interest in property is often known as planned giving.²

Aside from the law underlying the charitable deduction itself, several other aspects of law can bear on the availability of the deduction. These elements of law include receipt, recordkeeping, reporting, and disclosure requirements.³ Also involved is the battery of laws regulating the fundraising process.⁴

There is much additional law that relates to charitable giving but is outside the scope of this book. This book is part of a series on nonprofit organizations; however, the series includes books on the law governing charitable organizations as such, the law comprising regulation of the charitable fundraising process, tax and financial planning for charitable organizations, the fundraising process itself, and the accounting rules for charitable organizations.⁵

Prior to review of the laws specifically applicable to charitable giving, it is necessary to understand the fundamentals of the body of federal tax law concerning tax exemption for charitable organizations and the history underlying this jurisprudence.

§ 1.2 DEFINING TAX-EXEMPT ORGANIZATIONS

A tax-exempt organization is a unique entity. Almost always, it is a nonprofit organization.⁶ The concept of a nonprofit organization is usually a matter of state law, while the concept of a tax-exempt organization is principally a matter of the federal tax law.

The nonprofit sector of U.S. society has never been totally comfortable with this name. Over the years, it has been called, among other titles, the philanthropic sector, private sector, voluntary sector, third sector, and independent sector. In a sense, none of these appellations is appropriate.⁷

The idea of sectors of U.S. society has bred the thought that, in the largest sense, there are three of them. The institutions of society within the United States are generally classified as governmental, for-profit, or nonprofit entities. These three sectors of society are seen as critical for a democratic state—or, as it is sometimes termed, a civil society. Governmental entities are the branches, departments, agencies, and bureaus of the federal, state, and local governments. For-profit entities constitute the business sector of this society. Nonprofit organizations, as noted, constitute what is frequently termed the third sector, the voluntary sector, the private sector, or the independent sector of U.S. society. These terms are sometimes confusing; for example, the term private sector has been applied to both the for-profit sector and the nonprofit sector.

The rules concerning the creation of nonprofit organizations are essentially a subject for state law. Although a few nonprofit organizations are chartered by the U.S. Congress, most are incorporated or otherwise formed under state law. There is a substantive difference between nonprofit and tax-exempt organizations. While almost all tax-exempt organizations are nonprofit organizations, there are types of nonpro...