9.4 Special Types of Charitable Gifts

• Library: A Lawyer's Guide to Estate Planning: Fundamentals for the Legal Practitioner (ABA) (2018 Ed.)

9.4 Special Types of Charitable Gifts

9.41 Remainder Interest in Farm or Personal Residence

Whereas charitable gifts of a future interest are not normally deductible for income tax purposes, an exception exists for a gift to a charity of a remainder interest in a farm or personal residence.¹³ The donor computes the actuarial value of the charity's remainder interest based on IRS tables and then deducts that amount as an itemized charitable deduction on his or her personal income tax return.¹⁴ If the intervening life interest is to someone other than the donor or his or her spouse, a gift tax will be owed on the interest of the life tenant.

Example: A husband gives a life estate to his wife in a personal residence with the remainder to a charity. There is no gift tax on the gift to the wife, because of the gift tax marital deduction. The value of the remainder interest is deductible by the husband on his personal income tax return. If the gift were granted instead to the husband's son, a gift tax would be owed on the value of the son's life interest.

9.42 Qualified Conservation Contributions

Facade Easement. A donor can deduct the value of a conservation restriction or easement granted to a charity for certain property.¹⁵ This deduction is permitted even if the donor contributes the property itself to a family member. To qualify, the conservation restriction must include one or more of the following purposes:

1. Education or recreational purposes,

2. Protection of environmental systems,

3. Open space for scenic enjoyment, or

4. Historically important land areas.¹⁶

Example: A woman gives a building in the downtown business district to her son. The value of the building is $100,000; however, the mother gives to the city a perpetual easement for the exterior of the building to ensure that its original architecture will never be disturbed. The easement lessens the value of the building by $20,000. She receives a charitable deduction...