Contributions of stock to private foundations.

• Author: Rausch, Siobhan
• Position: Brief Article

In general, if a donor makes a gift of appreciated property to a private foundation, the charitable contribution deduction is reduced by the gain that would have been taxable had the property been sold. However, Sec. 170(e)(5) allows a deduction at fair market value (FMV) for contributions of qualified appreciated stock to private foundations.

Qualified appreciated stock is any stock of a corporation that is publicly traded and would result in long-term capital gain if sold. The FMV deduction is not available if more than 10% of the stock of any one corporation is contributed by the donor and the donor's family members.

This exception for gifts of publicly traded stock was added to the Code by the Deficit Reduction Act of 1984, with a termination date of Dec. 31, 1994. Prior law provided a deduction of only the "tax basis" of such stock contributions, and this is the rule that would apply again if Congress does not act.

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