The Tax Law of Charitable Giving, 5th Edition

Chapter FifteenOther Gifts of Remainder Interests

1. § 15.1 Overview
2. § 15.2 Contributions of Remainder Interests in Personal Residence or Farm
   1. (a) Personal Residence
   2. (b) Farm
   3. (a) General Rules
3. § 15.3 Undivided Portions of Entire Interests in Property
   1. (a) General Rules
   2. (b) Gifts of Certain Fractional Interests

Previously, this text discussed the principle of the federal income tax law underlying planned giving that is based on the concept of partial interests.¹ The charitable contribution deduction (if one is available) is for the gift of a remainder interest or an income interest.

§ 15.1 Overview

The law is specific as to the circumstances in which a charitable deduction arises, particularly when the charitable gift is made using a trust. Basically, there is no federal income tax charitable contribution deduction unless the gift meets one of a variety of stringent tests.² Related to this point is the rule of law that a charitable contribution consisting of a transfer of a future interest in tangible personal property is treated as made only when all intervening interests in, and rights to the actual possession or enjoyment of, the property have expired or are held by persons other than the donor or those related to the donor.³

Otherwise, there are few situations in which a federal income tax charitable contribution deduction is available for a gift of a partial interest. (The rules in this regard are essentially the same in the gift and estate tax setting.⁴) One exception ...