The Tax Law of Charitable Giving. Bruce R. Hopkins

      Because of delays in processing the gift, a donor may be placed in the position of initiating the transaction late in a year and then finding that the charitable deduction is not available until the subsequent year.

NOTES

      1 1 IRC § 170(a)(1); Reg. § 1.170A-1(a)(1). E.g., Christensen v. Commissioner, 40 T.C. 563 (1963).

      2 2 See ch. 5.

      3 3 Reg. § 1.170A-1(a)(1). See also Rev. Rul. 75-348, 1975-2 C.B. 75; Rev. Rul. 55-410, 1955-1 C.B. 297; Mann v. Commissioner, 35 F.2d 873 (D.C. Ct. App. 1929). See § 3.8.

      4 4 Glynn v. Commissioner, 76 T.C. 116 (1981), aff'd in unpublished opinion (1st Cir. 1982).

      5 5 E.g., Rev. Rul. 69-93, 1969-1 C.B. 139 (holding that title to real estate is transferred on the date that the “deed passed,” not on the previous date when the parties executed a contract for the sale of the property). The U.S. Tax Court held that a sale of land occurred when the “title was finally approved and the deed of conveyance was signed passing title and the right of possession to the vendee” (Wurtsbaugh v. Commissioner, 8 T.C. 183, 189 (1947)).

      6 6 Reg. § 1.170A-1(b), which states that, “[o]rdinarily, a contribution is made at the time delivery is effected.”

      7 7 See § 8.3.

      8 8 Reg. § 1.170A-1(e), which states that, “[i]f as of the date of a gift a transfer for charitable purposes is dependent upon the performance of some act or the happening of a precedent event in order that it might become effective, no deduction is allowable unless the possibility that the charitable transfer will not become effective is so remote as to be negligible. If an interest in property passes to, or is vested in, charity on the date of the gift and the interest would be defeated by the subsequent performance of some act or the happening of some event, the possibility of occurrence of which appears on the date of the gift to be so remote as to be negligible, the deduction is allowable.”

      9 9 See ch. 19.

      10 10 Winokur v. Commissioner, 90 T.C. 733, 740 (1988).

      11 11 E.g., LaGarde v. Commissioner, 76-1 U.S.T.C. ¶ 9248 (N.D. Ala. 1975); Mellon v. Commissioner, 36 B.T.A. 977 (1937). Also Murphy v. Commissioner, 61 T.C.M. (CCH) 2935 (1991). Instances in which the “donor” retained too much dominion and control over the property that was the subject of the gift are Woods v. Commissioner, 58 T.C.M. (CCH) 673 (1989), aff'd in unpublished opinion (6th Cir. 1991); Stjernholm v. Commissioner, 58 T.C.M. (CCH) 389 (1989), aff'd in unpublished opinion (10th Cir. 1991); Roughen v. Commissioner, 54 T.C.M. (CCH) 510 (1987).

      12 12 Nehring v. Commissioner, 131 F.2d 790 (7th Cir. 1942). Also Jordan v. United States, 297 F. Supp. 1326 (W.D. Okla. 1969).

      13 13 Reg. § 1.170A-1(b). Also Estate of Witt v. Fahs, 160 F. Supp. 521 (S.D. Fla. 1956); Estate of Spiegel v. Commissioner, 12 T.C. 524 (1949).

      14 14 The IRS wrote that a charitable contribution in the form of a check is deductible in the tax year in which the check was delivered, “provided the check is honored and paid and there are no restrictions as to time and manner of payment thereof” (Rev. Rul. 54-465, 1954-2 C.B. 93).

      15 15 Estate of Metzger v. Commissioner, 100 T.C. 204 (1993), aff'd, 94-2 U.S.T.C. ¶ 60,179 (4th Cir. 1994).

      16 16 See § 6.2(h).

      17 17 Estate of Metzger v. Commissioner, 100 T.C. 204, 215 (1993).

      18 18 Id.

      19 19 Rev. Rul. 67-376, 1967-2 C.B. 351.

      20 20 Priv. Ltr. Rul. 8706011.

      21 21 Griffin v. Commissioner, 49 T.C. 253, 261 (1967), in which the Tax Court wrote: “A postdated check is not a check immediately payable but is a promise to pay on the date shown. It is not a promise to pay presently and does not mature until the day of its date, after which it is payable on demand the same as if it had not been issued until that date although it is, as in the case of a promissory note, a negotiable instrument from the time issued.”

      22 22 Estate of Spiegel v. Commissioner, 12 T.C. 524 (1949). Consequently, these funds should not be in the donor's estate for estate tax purposes (e.g., Estate of Belcher v. Commissioner, 83 T.C. 227 (1984)). This rule does not apply, however, with respect to gifts by check written to noncharitable donees (McCarthy v. United States, 86-2 U.S.T.C. ¶ 13,700 (7th Cir. 1986)).

      23 23 See § 4.8.

      24 24 Rev. Rul. 78-38, 1978-1 C.B. 67. This ruling revoked Rev. Rul. 71-216, 1971-1 C.B. 96 (holding that a person making a contribution to a qualified charitable organization by a charge to a bank credit card is entitled to a charitable contribution deduction for the amount contributed in the tax year in which the donor paid the amount to the bank).

      25 25 Rev. Rul. 78-38, 1978-1 C.B. 67, 68.

      26 26 Granan v. Commissioner, 55 T.C. 753 (1971).

      27 27 See § 4.8.

      28 28 Rev. Rul. 78-38, 1978-1 C.B. 67.

      29 29 Rev. Rul. 80-335, 1980-2 C.B. 170.

      30 30 E.g., Commissioner v. Bradley, 56 F.2d 728 (6th Cir. 1932).

      31 31 Reg. § 1.170A-1(b). Of course, in applying this rule, it must be shown that the intermediate transferee is, in fact, an agent of the donor; e.g., Ferguson v. Commissioner, 99-1 U.S.T.C. ¶ 50,412 (9th Cir. 1999), aff'g 108 T.C. 244 (1997); Estate of Sawade v. Commissioner, 795 F.2d 45 (8th Cir. 1986); Greer v. Commissioner, 70 T.C. 294 (1978), aff'd on another issue, 634 F.2d 1044 (6th Cir. 1980); Londen v. Commissioner, 45 T.C. 106 (1965). Whether a person is, in fact, an agent of another is a question of state law. See § 8.1.

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