The Tax Cuts and Jobs Act includes three provisions related to charitable giving.

First, for gifts of cash to public charities (as opposed to nonoperating private foundations) the bill increases the amount that a taxpayer can deduct in any one year. Currently, donors of cash gifts to public charities can deduct an amount equal to 50% of their “contribution base,” defined as adjusted gross income determined without regard to any net operating loss carryback to the year. Contributions in excess of this percentage limitation may generally be carried forward for up to five years. The new rule increases the percentage limitation from 50% to 60%, starting in 2018.

Second, the Tax Cuts and Jobs Act amends I.R.C. § 170(l) to provide that, starting in 2018, contributions to a college or university that entitle the donor to purchase tickets or seating at an athletic event are not deductible. Under current law, 80% of such donations are deductible.

Third, the bill repeals an exception to the substantiation rules for certain contributions that are separately reported by the recipient charity. The idea behind the original rule was that the donor should not have to receive contemporaneous acknowledgment of a gift if the recipient reported the gift on “such form and in accordance with such regulations as the Secretary may prescribe.” Final regulations were never issued. Thus, the exception will be repealed retroactive to 2016 and the regular substantiation rules will continue to apply.

For more on the Tax Cuts and Jobs Act, click here.

Source: Tax Cuts and Jobs Act, Joint Explanatory Statement of the Committee of Conference, p. 95 (pdf)

Posted by: Joel D. Roettger, JD, LLM, EPLS