Recent Developments in Individual Taxation

Recent Developments in Individual Taxation

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“Sec. 170: Charitable, etc., contributions and gifts Effect of state or local tax credit: The IRS published final regulations on June 11, 2019, governing the availability of a charitable contribution deduction when a taxpayer receives or expects to receive a corresponding state or local tax credit for the charitable contribution (T.D. 9864, amending Regs. Secs. 1.170A-1, 1.170A-13, and 1.642(c)-3).

The final regulations retain the quid pro quo rule: a charitable contribution to an entity in expectation of a credit for state or local taxes results in a reduction of the charitable contribution for federal income tax purposes by the amount of the benefit of the state or local tax credit. The regulations take the position that something of value has been received in exchange for the charitable donation and, thus, the donation must be reduced by the value received. This position is the reversal of the IRS Chief Counsel determination in CCA 201105010.”

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