Legislative Update: Stock Gifts to Private Foundations

Legislative Update: Stock Gifts to Private Foundations

News story posted in Legislative on 21 September 1998| comments
audience: National Publication | last updated: 18 May 2011
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Summary

On September 17, 1998 the House Ways and Means Committee passed H.R. 4579, the "Taxpayer Relief Act of 1998," that, if enacted, would make permanent IRC 170(e)(5). That section, which enables taxpayers to deduct gifts of "qualified appreciated stock" held long-term by the donor to private non-operating foundations at fair market value, has existed as a periodic "expiring provision" in the Code since 1984. The most recent extension of this provision expired on June 30, 1998.

On September 17, 1998 the House Ways and Means Committee passed H.R. 4579, the "Taxpayer Relief Act of 1998," that, if enacted, would make permanent IRC 170(e)(5). That section, which enables taxpayers to deduct gifts of "qualified appreciated stock" held long-term by the donor to private non-operating foundations at fair market value, has existed as a periodic "expiring provision" in the Code since 1984. The most recent extension of this provision expired on June 30, 1998.

"Qualified appreciated stock" means any stock of a corporation--

1. for which (as of the date of the contribution) market quotations are readily available on an established securities market, and

2. which is capital gain property (as defined in IRC 170(b)(1)(C)(iv)).

Furthermore, a donor may not deduct contributions of more than 10 percent of the outstanding stock of the corporation. This amount includes all prior contributions of such stock by the taxpayer and those made by family members (as they are defined in IRC 267(c)(4)).

Under current law, gifts of long-term capital gain property, including "qualified appreciated stock," to private non-operating foundations are deductible based the lesser of the fair market value of the property or the donor's adjusted cost basis in the property.

Although the proposed provision is good news to those considering such gifts, enactment of the bill is by no means assured. President Clinton has threatened to veto the bill because he currently opposes using budget surpluses to fund tax cuts.

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