Magazine article The CPA Journal

Charitable Contributions of Tangible Personal Property - New Developments

Magazine article The CPA Journal

Charitable Contributions of Tangible Personal Property - New Developments

Article excerpt

OBRA 90 eliminated for tax year 1991 the alternative minimum tax (AMT) preference item for charitable contributions of appreciated tangible personal property.

Question: Due to the one-year nature of this provision, will a contribution carryover of such property create a tax preference item in years subsequent to 1991? IRS has issued Rev. Rul. 90-111, which states that no item of tax preference will be generated by a 1991 contribution carried over to a subsequent year. The ruling concludes that tangible personal property contributed in 1991 that is not considered capital gain property for AMT purposes, retains its character as other than capital gain property for AMT purposes in later years.

Example: In 1991, an individual taxpayer, A, makes a charitable contribution of art to a museum. A's basis in the artwork is $10,000 and the art has a fair market value of $100,000. Assume A's 1991 regular tax charitable deduction is limited to $50,000 which creates a regular tax contribution carryover of $50,000 to 1992. As a result of this OBRA provision, the appreciation element of $90,000 is not an item of tax preference in 1991 or later years. …

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