received over $4 million in cash; if the charity, however, did not tender its shares and the acquisition was abandoned, the charity would have been left holding a minority interest in a closely held corporation, the “market value of which might be questionable.”212 212 E.g., Priv. Ltr. Rul. 9623035.
213 213 In almost every charitable gift situation involving money, the contribution is made with after-tax dollars. That is, the funds must first be taken into income before they can be deductible when transferred to charity. Here, however, the IRS concluded that a rebate paid by a retailer participating in the card program is not income to the cardholder. Rather, the rebate reflects a reduction in the purchase price paid for an item purchased with the company's card. This holding is based on Rev. Rul. 76-96, 1976-1 C.B. 23, as modified by Rev. Rul. 2005-28, 2005-1 C.B. 997, stating that rebates paid by an automobile manufacturer to qualifying retail customers who purchase new automobiles are not includible in the gross income of the customers.
214 214 Priv. Ltr. Rul. 200945022.
215 215 IRC § 316(a), which defines a dividend as a distribution of property by a corporation to its stockholders out of its earnings and profits.
216 216 Rev. Rul. 68-296, 1968-1 C.B. 105. Dividends are not deductible by the payor corporation.
217 217 Crosby Valve & Gage Company v. Commissioner, 380 F.2d 146 (1st Cir. 1967), aff'g, 46 T.C. 641 (1966).
218 218 See § 2.5(a).
219 219 As to the latter, see IRC § 512(b)(10).
220 220 Also Dave Inv. Co. v. Commissioner, 462 F.2d 1373 (9th Cir. 1972).
221 221 United States v. Knapp Brothers Shoe Manufacturing Corp., 384 F.2d 692 (1st Cir. 1967), cert. den., 390 U.S. 989 (1968).
222 222 The rules are somewhat different in this regard in such contexts as planned giving (see Part Four) and quid pro quo situations (see § 20.2), but even there the statement is correct as to the deductible portion of the transaction.
223 223 See § 7.18.
224 224 Musgrave v. Commissioner, 80 T.C.M. (CCH) 341 (2000).
225 225 See § 23.1.
226 226 See § 2.3.
227 227 See § 2.1(a).
228 228 Musgrave v. Commissioner, 80 T.C.M (CCH) 341, 344 (2000).
229 229 Id.
230 230 Id.
231 231 See § 21.4.
232 232 See § 2.4.
233 233 Reg. § 1.507-2(a)(8).
234 234 Priv. Ltr. Rul. 200037053. The IRS discussed the charitable gift completion requirements in INFO 2005-0141.
235 235 IRC § 139(c). This legislation was enacted in 2001, creating an exclusion from gross income for qualified disaster relief payments (IRC § 139(a)). The U.S. president, on March 13, 2020, declared the COVID-19 pandemic a national emergency, thereby triggering application of the federal tax disaster relief law, enabling employers to provide financial assistance to employees and their family members by means of charitable organizations.
236 236 IRS Tax Exempt and Government Entities Division, Disaster Relief: Providing Assistance Through Charitable Organizations (Pub. 3833 (rev. 2014)).
237 237 In a summary of the federal tax law concerning international grantmaking by charitable organizations, the IRS suggested that, to be an eligible recipient of financial assistance in the disaster relief context, an individual must be “needy”; the word distressed was not used (Chief Couns. Adv. Mem. 200504031).
238 238 See § 2.3(b), text accompanied by note 331.
239 239 See § Id., text accompanied by note 329.
240 240 In general, Tax-Exempt Organizations § 7.2(b) (2021 cum. supp.).
241 241 See § 21.4.
242 242 In general, Private Foundations § 9.3(b).
243 243 See § 2.4(c).
244 244 See Private Foundations chs. 5 and 9.
245 245 Priv. Ltr. Rul. 200307084.
246 246 See § 2.3(b), text accompanied by infra notes 363–373.
247 247 Amounts transferred by or for employers to or for the benefit of employees are presumed not to be gifts, but rather items of gross income. IRC § 102(c). The IRS ruled that this rule is “inoperative” in this case because the payments are made by the charitable organization.
