IRS Allows Favorable Gift Treatment for S Corp

Greg Herman-Giddens (of the North Carolina Estate Planning Blog) notices us in this post to a recent revenue ruling (Rev. Rul. 2008-16; 2008-11 IRB 1) that gives favorable treatment to charitable gifts of appreciated property by a Subchapter S corporation.

He writes:

Normally a shareholder’s income tax deduction for an S corporation’s business losses is limited to the shareholder’s basis in the corporation’s stock. The IRS confirmed that charitable gifts can qualify for better tax treatment. The IRS concluded that if an S corporation made a charitable contribution in 2006 or 2007 of appreciated property (such as real estate), the shareholder was entitled to claim a charitable income tax deduction that exceeded the shareholder’s basis in the stock. This favorable tax treatment was a temporary measure contained in legislation that expired in 2007, but it is one of the “extender” laws (like “Charitable IRA rollover”) and there is a good chance that it will be extended into 2008.

Greg credits Professor Chistopher Hoyt at the UMKC Law School, as the originator for his post.

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