Charitable, Etc., Contributions and Gifts (I.R.C. 170)

January 8, 2016

Disallowance of Deduction in Certain Cases and Special Rules

Under I.R.C. 170(f)(8), no charitable deduction is allowed for any contribution of $250 or more unless the taxpayer substantiates the contribution by a “contemporaneous written acknowledgment” (CWA) of the contribution by the donee organization.  This CWA is typically the letter provided by the entity receiving the donation.

A CWA must meet certain content requirements and be provided contemporaneously, which means on or before the earlier of (a) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or (b) the due date (including extensions) for filing the return.

There is a statutory exception to the CWA rule – which means the CWA does not need to be provided if the exception is met.  The exception, however, relies on regulations to be promulgated.

Regulations were proposed (REG-138344-13) with respect to this exception, but were criticized as being too burdensome and requiring reporting that could disincentivize charitable giving.  The regulations would have permitted the donee organization to report the donation on the donee’s Form 990.  The proposed regulations were withdrawn in January 2016.  Unless other regulations are substituted, the statutory exception to CWA cannot be used.


Social Welfare Organizations (I.R.C. 501(c)(4))

January 5, 2016

Private Letter Rulings

PLR 201425013: Two exemptions revoked or denied.  A 501(c)(4) organization renting tables and chairs is not eligible for exempt status. A 501(c)(6) benefitting only one industry segment is not eligible for exempt status.

PLR 201507025 (Nov. 18, 2014):  IRS issued final adverse determination revoking Code Sec. 501(c)(4) org.’s exempt status, where org. didn’t operate exclusively for promotion of social welfare.  The activities of the organization were to research, develop and distribute, free of charge, computer software that facilitates uncensored and secure communications by human rights activists, journalists, and civil society.


Tribal Economic Development Bonds (I.R.C. § 7871)

January 3, 2016

Volume Cap:

Notice 2015-83 modified Notice 2012-48 regarding the process for allocation of the available amount of national bond volume limitation authority for tax-exempt tribal economic development bonds under I.R.C. § 7871(f).  The notice provides a special rule for bonds issued under a “draw-down” loan structure in which the lender advances funds for the loan on different dates.  The notice allows additional time to use allocated volume cap for issuance of draw-down bonds if the issuer meets certain requirements.


Fees vs. Taxes

December 27, 2015

General Resources:

Colorado Union of Taxpayers Foundation v. City of Aspen (  Whether a $0.20 per bag fee imposed by stores is an unvoted tax or fee.  The court of appeals determined that the fee is a fee that does not violate constitutional debt limits because the primary purpose of the fee was to reduce waste, and the majority of the revenues was used to provide reusable bags to residents and visitors.  No part of the balance of the revenues was deposited to the City’s general fund for general governmental use.


December 10, 2015

Tax-exempt bonds may now be issued in connection with WIFIA loans.  See FAST Act signed into law on December 4, 2015 (Sec. 1445, page 331).

Public/Private Partnerships (I.R.C. 141 and I.R.C. 145)

October 3, 2015


See ABA Section of Taxation, “Comments on Safe Harbors under Sections 141 and 145” published October 2, 2015 for a discussion of suggested safe harbors under section 141 and section 145 for public/private arrangements relating to the provision of capital improvements to be owned by qualified users.  (P3 arrangements)

Also see NABL, “REG-140379-02; REG-142599-02: Allocation of and Accounting for
Tax-Exempt Bond Proceeds for Purposes of the Private Activity Bond Restrictions” published September 17, 2014 for a discussion of partnership matters relating to allocation and accounting of bond proceeds.

Note that, on October 25, 2015, the Treasury Department published final regulations regarding allocation and accounting rules under Sections 141 and 145.  Click here to view the regulations and a discussion of any particular allocation and accounting matters.

What is Interest (I.R.C. 103)

September 17, 2015

CCA 201537022:  Developer includes costs of improvements in basis of lots sold.  Developer also receives a bond from the district and bond interest payments.  Developer treats interest payments as tax-exempt interest and does not reduce basis of lots sold correspondingly.  IRS determines that this is inconsistent treatment.  Interest payments, given the Developer’s treatment of costs, will be treated as ordinary income that is taxable to the Developer.  See also Rev. Proc. 92-29.