Posted October 1st, 2006

The PPA Before and After

In last month’s issue of Give & Take, we explored the IRA rollover charitable provisions of the Pension Protection Act of 2006 (PPA). The bill also contains other provisions that will affect charitable organizations and their donors. Let’s look at some of the other provisions of the PPA.

Before PPA

After PPA

1. A contribution of cash or a check under $250 did not require the donor to provide a receipt for tax deductibility purposes.

Contributions of cash or a check for any amount now require documentation for tax deductibility purposes—for those gifts under $250, a cancelled check or bank record or a receipt from the charitable organization is required. The receipt requirements are the same for gifts of $250 or more.

2. Gifts of conservation easements could offset taxes by 30% of adjusted gross income. Donors could carry forward any excess deductions for five years.

Gifts of conservation easements can offset taxes by 50% of AGI. Donors can carry forward any excess deductions for 15 years.

 

3. Contributions of clothing and household items were generally deductible at their fair market value.

No charitable deduction is allowed for a gift of clothing or household items unless the items are considered to be in good used condition or better.

 

4. The contribution of a facade easement of a building in a historic district was deductible as a qualified conservation contribution.

To qualify for deductibility as a conservation contribution, the easement donation must preserve the entire exterior of the historic building—not just the facade—and prohibit any alterations of the exterior that are inconsistent with the historical character of the exterior.

 

5. A contribution of food inventory by a business was generally deductible at the business’s cost basis, or the food inventory’s fair market value if less than the cost basis.

A contribution of food inventory by a business is deductible at either the business’s cost basis plus one-half of the profit if the food had been sold or twice the business’s cost basis, whichever is less.

 

6. A contribution of book inventory was generally deductible at the business’s cost basis, or the book inventory’s fair market value if less than the cost basis.

Contributions of book inventory to public schools qualify for enhanced deductions for donating businesses.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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