Friday, February 17, 2012

Limitations on Charitable Deductions and Carryovers - § 170

Limitations on Charitable Deductions and Carryovers under § 170(b)a.

§ 170(b) imposes quantifiable limits on how much can be deducted based on AGI. You can deduct charitable deductions in excess of 50% of your AGI on income tax returns. If giving the charitable deduction to a private organization, you can only deduct 30%:

  1. 50 % total limit § 170(1)(1)(g)
  2. 30% limit to private organizations
  3. 30 % limit to appreciated property
  4. 20% limit to appreciated property to private organization IRS Reg. 1.170A-1 (c)(1)
These limits are applied sequentially by the IRS which means that the total of all gifts is first compared with the overall 50 percent limit on charitable contribution deductions. If it exceeds that limit, the deductions disallowed are considered to come from the least-favored category according to the Internal Revenue Code.

Any amounts that are disallowed by these IRS rules may be CARRIED OVER by the taxpayer and deducted in up to five subsequent tax years, pursuant to the rules of § 170(d). The charitable gifts retain their character in the carryover year according to the IRS regulations 

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