Bruce R. Hopkins - The Tax Law of Charitable Giving

101 101Nonprofit Almanac (2002) at 3.

102 102Nonprofit Nation at 8.

103 103Id. at 1.

104 104That is, organizations that are tax-exempt pursuant to IRC § 501(c).

105 105Tax-Exempt Organizations ch. 13.

106 106Id. ch. 14.

107 107Id. ch. 15.

108 108Id. ch. 16.

109 109Id. § 19.4(a).

110 110Id. § 19.11(a).

111 111Id. § 19.6.

112 112IRS 2019 Data Book (issued on June 29, 2020).

113 113Nonprofit Nation at 8. The point was articulated more forcefully in the fifth edition (1996) of the Nonprofit Almanac, where it was stated that “[c]ounting the number of institutions in the independent sector is a challenge” (Nonprofit Almanac at 25). Even with a complete and accurate tally, difficulties continue: “Trying to understand the various exempt organizations provisions of the Internal Revenue Code is as difficult as capturing a drop of mercury under your thumb” (Weingarten v. Commissioner, 86 T.C. 669, 675 (1986), rev'd (on other grounds), 825 F.2d 1027 (6th Cir. 1987).

114 114Nonprofit Almanac at 139. The term church includes analogous religious congregations, such as temples and mosques. See Tax-Exempt Organizations § 10.3.

115 115See Tax-Exempt Organizations § 28.2(b)(i).

116 116See Tax-Exempt Organizations § 26.11.

117 117These are organizations that normally do not generate more than $5,000 in revenue. See Tax-Exempt Organizations § 28.2(b)(ii).

118 118See Tax-Exempt Organizations § 28.3.

119 119Nonprofit Nation at 9.

120 120Id. at 10.

121 121Id. at 115.

122 122Id.

123 123Id. at 18, 27.

124 124Id. at 115. Fees for services and goods were estimated to be 70.3 percent of the total; contributions and nongovernment grants were said to be 12.3 percent of the total (id. at 143–144).

125 125Id. at 121.

126 126These data are from Giving USA 2020, published by the Giving USA Foundation, and researched and written by the Center on Philanthropy at Indiana University.

127 127IRS, “Individual Noncash Charitable Contributions, Tax Year 2016,” Statistics of Income Bulletin (Pub. 5337 (rev. May, 2019).

128 128See § 22.7(a).

129 129Nonprofit Nation at 12.

130 130Report of the Commission on Private Philanthropy and Public Needs: Giving in America—Toward a Stronger Voluntary Sector at 34–48 (1975).

131 131Lindsey, “The Charitable Contribution Deduction: A Historical Review and a Look to the Future,” 81 Neb. L. Rev. (no. 3) 1056, 1057 (2002). This point is substantially overstated in Duquette, “Founders' Fortunes and Philanthropy: A History of the U.S. Charitable-Contribution Deduction,” 93 Business History Rev. 553 (Autumn 2019), where it is written that the “workings of the [charitable] deduction have changed little since its creation in 1917” (id.). Also Taggart, “The Charitable Deduction,” 26 Tax L. Rev. 63 (1970).

132 132Cf.: “Direct changes to the contribution deduction since its enactment have been few and relatively modest” (Duquette, supra note 131, at 559).

133 133“There are a wide variety of organizations to which a taxpayer can donate money or property and receive a charitable contribution deduction” (Lindsey, supra note 131, at 1057).

134 134Pub. L. No. 65-50.

135 135Congressional Research Service, “The Charitable Deduction for Individuals: A Brief Legislative History (R46178) 4 (Jan. 14, 2020). “The Congress added a deduction for gifts to charitable organizations to the bill implementing these high rates, not to encourage the wealthy to give their fortune away (which the most influential and richest men were already doing) but to not discourage their continued giving in light of a larger tax bill” (Duquette, supra note 131, at 558).

136 136Joint Committee on Taxation, Present Law and Background Relating to the Federal Tax Treatment of Charitable Contributions (JCX-55-11) 4 (Oct. 14, 2011).

137 137Congressional Research Service, supra note 135, at 5.

138 138Pub. L. No. 78-315.

139 139Pub. L. No. 82-465.

140 140Pub. L. No. 83-591.

141 141This was the “first time that Congress encouraged certain charitable giving by granting more generous deductions for donations given to certain charitable organizations than to others” (Lindsey, supra note 131, at 1063).

142 142Pub. L. No. 88-272.

143 143Pub. L. No. 91-172.

144 144Pub. L. No. 97-34.

145 145Senate Committee on Finance, Statement of Donald C. Lubick, Assistant Secretary for Tax Policy, U.S. Treasury Department, Hearings Before the Subcommittee on Taxation and Debt Management Generally of the Committee on Finance on S. 219, 96th Cong., 2nd Sess. 51 (Jan. 30, 1980)).

146 146Id. at 68.

147 147Joint Committee on Taxation, General Explanation of the Economic Recovery Act of 1981 (JCS-71-81) 49 (Dec. 29, 1981).

148 148Pub. L. No. 98-369.

149 149Pub. L. No. 100-647.

150 150Pub. L. No. 103-66.

151 151Pub. L. No. 104-188.

152 152Pub. L. No. 105-277.

153 153Pub. L. No. 109-135.

154 154Pub. L. No. 115-97.

155 155The U.S. Tax Court, in 2020, observed that, “[i]n the past 34 years Congress has amended section 170 more than 30 times” (Oakbrook Land Holdings, LLC v. Commissioner, T.C. Memo. 2020–54 (2020)). Footnote 5 in that opinion contains the public law citations for each of these amendments.

156 156Lindsey, supra note 131, at 1059.

157 157This report, published in mid-2019, was researched and written by the Indiana University Lilly Family School of Philanthropy. It was funded by the Charles Stewart Mott Foundation and the Fidelity Charitable Trustees' Initiative.

158 158Joint Economic Committee (Republicans), “Reforming the Charitable Deduction,” as part of its Social Capital Project (Report no. 2 (Nov. 2019)).

159 159Id. at 14.

160 160Id.

161 161Id.

162 162Lindsey, supra note 131, at 1092.

163 163Duquette, supra note 131, at 577.

§ 2.1 Definition of Gift (a) Perspectives (b) Availability of Charitable Deduction (c) Quid Pro Quo Situations (d) Incidental Benefits (e) Requirement of Transfer of Value (f) Requirement of Donor Ownership (g) Donor Recognition (h) Anticipatory Income Assignments (i) Rebate Plans (j) Dividends Paid to Charitable Organizations (k) Requirement of Completion (l) Employee Hardship Programs (m) Mandatory Payments

§ 2.2 Definition of Donor

§ 2.3 Definition of Charitable Organization (a) Overview of Law (b) Charitable Organizations—Criteria

§ 2.4 Public Charities and Private Foundations (a) Public Charitable Organizations (b) Other Nonprivate Foundations (c) Private Foundations

§ 2.5 Unrelated Business Law (a) Overview of Law (b) Definition of Trade or Business (c) Regularly Carried On Rule (d) Concept of Unrelated Business (e) Unrelated Business Taxable Income (f) Exempted Activities (g) Exempted Income (h) Bucketing Rule

§ 2.6 Factors Affecting Income Tax Deductibility of Charitable Gifts

§ 2.7 Charitable Organizations Listing Reliance Rules (a) IRS's Searchable Databases (b) Charitable Status Reliance Rules (c) Safe Harbor Rules as to Public Charity Status

§ 2.8 Grantor Trust Law

The basic federal law on the subject of the tax aspects of charitable giving is contained in the Internal Revenue Code and in the interpretations of that body of law found in court opinions, Treasury Department and Internal Revenue Service (IRS) regulations, and IRS public rulings. (Technically not law , pronouncements by the IRS on this subject may be found in private letter rulings, technical advice memoranda, and chief counsel advice memoranda.) This body of law is specific on various aspects of the law of charitable giving, as the pages of this book attest.