Estate Planning

IRS Allows Favorable Gift Treatment for S Corp

By Gregory Herman-Giddens

This from Professor Chistopher Hoyt at the UMKC Law School, with good news for S Corporation owners:

The IRS released a revenue ruling that confirmed many of our hopes  regarding charitable gifts of appreciated property by a Subchapter S corporation. Normally a shareholder's income tax deduction for an S corporation's business losses is limited to the shareholder's basis in the corporation's stock. The IRS confirmed that charitable gifts can qualify for better tax treatment. The IRS concluded that if an S corporation made a charitable contribution in 2006 or 2007 of appreciated property (such as real estate), the shareholder was entitled to claim a charitable income tax deduction that exceeded the shareholder's basis in the stock. This favorable tax treatment was a temporary measure contained in legislation that expired in 2007, but it is one of the "extender" laws (like "Charitable IRA rollover") and there is a good chance that it will be extended into 2008.

Rev. Rul. 2008-16; 2008-11 IRB 1

Full post as published by North Carolina Estate Planning Blog on March 05, 2008 (boomark / email).