The Tax Law of Charitable Giving. Bruce R. Hopkins

(2002).

      50 50 The court concluded that the market quotations requirement has the same meaning for the purpose of defining the phrase qualified appreciated stock and in determining when securities are publicly traded so as to exempt a donor from the appraisal requirements (see § 19.4(c), text accompanied by note 141).

      51 51 Priv. Ltr. Rul. 200702031.

      52 52 IRC § 170(e)(5)(C)(i).

      53 53 IRC § 170(e)(5)(C)(ii). The term member of the family has the same meaning as that referenced in IRC § 267(c)(2), which is that the family of an individual “include[s] only his [or her] brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants.” IRC § 267(e)(4). For purposes of applying this 10 percent limitation, the fact that the private foundation subsequently disposed of qualified appreciated securities is irrelevant (the stock contributed is still subject to the limitation that securities contributed from an estate are not attributable to an individual for purposes of computing the limitation (because an income tax charitable contribution deduction was not claimed or allowable, IRC § 170(e)(1)(B)(ii)), and, in applying the limitation, securities are valued as of the time of their original contribution (i.e., they are not revalued when subsequent contributions are made). Priv. Ltr. Rul. 200112022.

      54 54 E.g., Priv. Ltr. Rul. 9247018.

      55 55 IRC § 170(e)(1)(B)(i)(I); Reg. § 1.170A-4(b)(2)(ii).

      56 56 IRC § 170(e)(1)(B)(i)(II). See § 3.6(c).

      57 57 For this purpose, a fixture that is intended to be severed from real property is treated as tangible personal property. Reg. § 1.170A-4(b)(2), last sentence.

      58 58 See § 2.3.

      59 59 See § 8.2.

      60 60 See ch. 5.

      61 61 Reg. § 1.170A-4(b)(3)(i).

      62 62 Id. The last of these rules is of particular importance in the context of planned giving, where property contributed is often given to a trust, such as a charitable remainder trust (see, in particular, ch. 10).

      63 63 Reg. § 1.170A-4(b)(3)(ii)(a).

      64 64 Reg. § 1.170A-4(b)(3)(ii)(b).

      65 65 Id.

      66 66 IRC § 170(e)(7)(C).

      67 67 IRC § 170(e)(7)(B).

      68 68 IRC § 170(e)(7)(A).

      69 69 IRC § 170(e)(7)(D).

      70 70 IRC § 6720B. Other penalties may also apply, such as the penalty for aiding and abetting the understatement of tax liability (IRC § 6701). See § 23.6(b).

      71 71 See § 3.3.

      72 72 E.g., Martin v. Machiz, 251 F. Supp. 381 (D. Md. 1966); Magnolia Dev. Corp. v. Commissioner, 19 T.C.M. (CCH) 934 (1960).

      73 73 This sidestep of the step transaction doctrine has its basis in Palmer v. Commissioner, 62 T.C. 684 (1974), aff'd on another issue, 523 F.2d 1308 (8th Cir. 1975), to which the IRS agreed in Rev. Rul. 78-197, 1978-1 C.B. 83. In Palmer, a gift of stock in a closely held corporation to a charitable organization, followed by a prearranged redemption, was not recharacterized as a redemption between the donor and the redeeming corporation and a later gift of the redemption proceeds to the charity. This was the outcome, although the donor held voting control over both the corporation and the charitable organization. The IRS lost the case because the charity was not legally bound to redeem the stock, nor was the corporation in a position to compel the redemption.

      74 74 Greene v. United States, 806 F. Supp. 1165 (S.D.N.Y. 1992). This case also involved application of the rules concerning anticipatory assignments of income (see § 3.1(g)). This case was affirmed in an opinion containing an extensive discussion of the step transaction doctrine as it applies in the charitable giving setting. 13 F.3d 577 (2d Cir. 1994).

      75 75 IRC § 1256(a)(3).

      76 76 IRC § 170(e)(1)(A). See § 3.4(b).

      77 77 See § 3.3.

      78 78 See § 2.1(h).

      79 79 Greene v. United States, 806 F. Supp. 1165, 1172 (S.D.N.Y. 1992).

      80 80 Id. at 1173.

      81 81 Blake v. Commissioner, 697 F.2d 473 (2d Cir. 1982), aff'g 42 T.C.M. (CCH) 1336 (1981).

      82 82 S.C. Johnson & Son, Inc. v. Commissioner, 63 T.C. 778 (1975).

      83 83 Id. at 780.

      84 84 Grove v. Commissioner, 490 F.2d 241, 246 (2d Cir. 1973).

      85 85 Id.

      86 86 Id. at 247.

      87 87 Id.

      88 88 Humacid Co. v. Commissioner, 42 T.C. 894, 913 (1964). This observation is often quoted (e.g., Grove v. Commissioner, 490 F.2d 241, 246 (2d Cir. 1973); Carrington v. Commissioner, 476 F.2d 704, 708 (5th Cir. 1973); Dickinson v. Commissioner, T.C. Memo. 2020-128 (2020)).

      89 89 Martin v. Machiz, 251 F. Supp. 381, 390 (D. Md. 1966).

      90