9059 / What deduction is an individual allowed to take with respect to gifts made to charitable organizations?

The amount that may be deducted in any one year is subject to certain income percentage limits that depend on the type of property, the type of charitable organization to which the gift is made, and whether the contribution is made directly “to” the charity or “for the use of” the charity (see Q 9064). Taxpayers are required to itemize deductions in order to take a charitable deduction.

Generally, a gift of less than an individual’s entire interest in property is not deductible, though certain exceptions to this rule exist (see Q 9070 and Q 9071).

For a charitable contribution to be deductible, the charity must receive some benefit from the donated property.³ In addition, the donor cannot expect to receive an economic benefit (aside from the tax deduction) from the charity in return for the donation.⁴ For instance, if a taxpayer contributes substantially appreciated property, and later reacquires it from the charity under a prearranged transaction, or if the charity sells the appreciated property and uses the proceeds to purchase other property from the taxpayer under a similar arrangement, the taxpayer is required to recognize gain on the contribution.⁵ However, where there is no arrangement and no duty on the part of the charity to return the property to the donor, the taxpayer is entitled to the deduction. In addition, if the charity does return the property, the taxpayer receives a new basis in the property (i.e., the price he paid to reacquire it).⁶