Understanding IRC §170
Internal Revenue Code Section 170 provides the framework for federal income tax deductions related to charitable contributions.
The rules surrounding charitable giving can involve many considerations including the type of property contributed, valuation, documentation, and taxpayer circumstances.
This page is intended for educational purposes and should not be considered tax, legal, or financial advice.
Tax Reference Topics
- Charitable Contributions
- Noncash Property Donations
- Fair Market Value Concepts
- Documentation Requirements
- Professional Review
Charitable Contribution Fundamentals
Charitable contribution rules generally depend on factors such as the taxpayer, recipient organization, type of property, and supporting documentation.
Eligible Organizations
Certain qualified organizations may receive charitable contributions under federal tax rules.
Property Contributions
Charitable contributions may involve cash or noncash property depending on the facts and circumstances.
Documentation
Recordkeeping and supporting documentation are important elements of charitable contribution compliance.
Capital Gain Property Concepts
Certain charitable contributions may involve property that has appreciated in value. The treatment of contributed property depends on the type of asset, holding period, valuation, and applicable tax rules.
Appreciated Property
Property that has increased in value may have different tax considerations than ordinary income property.
The classification of property and the calculation of any deduction should be reviewed with a qualified tax professional.
Holding Period Considerations
Tax rules may distinguish between short-term and long-term capital gain property depending on ownership duration.
Taxpayers should consult current IRS guidance and professional advisors.
Understanding Fair Market Value
Determining the value of donated property is an important component of noncash charitable contributions.
Fair Market Value
Fair market value generally represents the price property would receive in an open market between willing participants.
Valuation Support
Supporting documentation may be needed to explain how a value was determined.
Qualified Professionals
Taxpayers should work with appropriate professionals regarding valuation questions.
Bargain Sale Transactions
A bargain sale generally refers to a situation where property is transferred to a qualified organization for less than its fair market value.
The difference between the fair market value and the amount received may involve both a sale component and a charitable contribution component.
The specific tax treatment depends on the property, valuation, taxpayer circumstances, and applicable IRS rules.
Illustrative Example
Example shown for educational purposes only. Actual tax results require individual review.
Qualified Appraisal Considerations
Certain noncash charitable contributions may require additional valuation documentation.
Qualified Appraiser
Certain contributions may require an appraisal performed by a qualified appraiser according to applicable IRS requirements.
Appraisal Summary
Supporting appraisal information may need to be included with required tax forms.
Record Retention
Maintaining organized records helps support the charitable contribution documentation.
IRC §170 Educational Library
Topics commonly reviewed when discussing charitable contributions and noncash property.
IRC §170
Charitable contributions and related deduction rules.
Treasury Regulations
Additional guidance interpreting federal tax requirements.
IRS Publication 526
General information regarding charitable contributions.
IRS Publication 561
General guidance regarding determining the value of donated property.
IRS Form 8283
Reporting certain noncash charitable contributions.
Recordkeeping
Maintaining documentation supporting a charitable contribution.
IRC §170 Questions
We work very hard to reduce risk in every way that we can, and there are a few risks that we try to prepare for; audits, market volatility, compliance.
Audits: We keep the very best records, purchase receipts, sales receipts, valuations and more. all of our records are emailed and timestamped with the emails. So our records show a real, true, provable and fact based timeline that can be referenced during an audit. Additionally we are always sourcing evidence to support valuations. This available in real time in our portal or we can send the entire packet to you at anytime.
Market Volatility: Exosomes are a newer emergent into the medical and cosmetic world. Most countries use exosomes however America has more than normal amounts of regulation, trends show more acceptance and growing demand for exosomes within America and worldwide, however there is always the possibility of something disrupting the market and causing a drop in the value.
Compliance: We strive to not only follow the letter of the law as outlined in the IRC, but also we follow the spirit of the law. Meaning that a tax advantage using charitable donations can be 100% compliant but if it only is used as a tax strategy then it can be disallowed. Our program follows all the regulations with in IRC 170 and in addition has real impact on peoples lifes, helps fund real non profits and provides real charity. Meaning this is non only tax compliant by the letter of the law but also the spirit of the law.
This is classified as a "capital gains asset" that is donated and through IRC 170 the IRS allows this to be a below the line deduction of 30% of the AGI.
There will be a complete packet with supporting documents and 2 IRS Forms a Form 8283 and a Form 8949, one for charitable donations and the other for capital gains income.
All the supporting documents should be kept with your records and the 2 IRS Forms will be sent in with your taxes.
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