Friday, October 28, 2022

S Corporations and Charitable Contributions

In light of the recent changes to the AGI limitations for charitable contributions, it is interesting to explore charitable giving in the S Corporation context.  In 2019, a CPA Journal article noted that unique planning opportunities exist for charitably minded S corporation shareholders.  For example, the rule that limits the pass-through deduction to the shareholder’s basis in S corporation stock and debt is not applicable when the S corporation donates appreciated property to a charity.  Thus, even if a shareholder has a zero basis in his/her S corporation stock, appreciated property donated to a charity would pass through as a charitable contribution.  In effect, the deduction becomes the portion limited by (and reducing) basis, plus the appreciation in the donated property. This interesting article addresses the incentives Congress has provided since 2006, which are still applicable under the TCJA.

 

Khrista McCarden

Hoffman Fuller Associate Professor of Tax Law

Tulane Law School 

https://lawprofessors.typepad.com/nonprofit/2022/10/s-corporations-and-charitable-contributions.html

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