Taxation & Estate Planning

IRS Allows Favorable Gift Treatment for S Corp

By Michael D. Bonasera, Esq.

Greg Herman-Giddens (of the North Carolina Estate Planning Blog) notices us in this post to a recent revenue ruling (Rev. Rul. 2008-16; 2008-11 IRB 1) that gives favorable treatment to charitable gifts of appreciated property by a Subchapter S corporation.

He writes:

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.

Greg credits Professor Chistopher Hoyt at the UMKC Law School, as the originator for his post.

Full post as published by The Ohio Trust & Estate Blog on March 07, 2008 (boomark / email).