Page 107 - BusinessStructures & Forms

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attributable to an understatement arising date the resolution was adopted. See communication from the donee
from an undisclosed listed transaction or section 170(a)(2)(B). organization indicating the name of the
an undisclosed reportable avoidance Limitation on deduction. Generally, the organization, the date of the contribution,
transaction (other than a listed total amount claimed cannot be more than and the amount of the contribution.
transaction) entered into in tax years 10% of taxable income (line 30) computed Contributions of $250 or more. A
beginning after October 22, 2004. without regard to the following. corporation can deduct a contribution of
Special rules apply to: • Any deduction for contributions. $250 or more only if it gets a written
• Forgone interest on certain • The special deductions on line 29b. acknowledgment from the donee
below-market-rate loans (see section • The limitation under section 249 on the organization that shows the amount of
7872). deduction for bond premium. cash contributed, describes any property
• Original issue discount (OID) on certain • Any net operating loss (NOL) carryback contributed (but not its value), and either
high yield discount obligations. See to the tax year under section 172. gives a description and a good faith
section 163(e)(5) to determine the amount • Any capital loss carryback to the tax estimate of the value of any goods or
of the deduction for OID that is deferred year under section 1212(a)(1). services provided in return for the
and the amount that is disallowed on a • Deduction for income attributable to contribution or states that no goods or
high yield discount obligation. The rules domestic production activities of specified services were provided in return for the
under section 163(e)(5) do not apply to agricultural or horticultural cooperatives. contribution. The acknowledgment must
certain high yield discount obligations Carryover. Charitable contributions over be obtained by the due date (including
issued after August 31, 2008, and before the 10% limitation cannot be deducted for extensions) of the corporation's return, or,
January 1, 2011. See section 163(e)(5) the tax year but can be carried over to the if earlier, the date the return is filed. Do not
(F). next 5 tax years. See the exception below attach the acknowledgment to the tax
• Interest which is allocable to for farmers and ranchers and certain return, but keep it with the corporation's
unborrowed policy cash values of life Native Corporations. records.
insurance, endowment, or annuity Contributions of property other than
contracts issued after June 8, 1997. See Special rules apply if the corporation cash. If a corporation (other than a
section 264(f). Attach a statement has an NOL carryover to the tax year. In closely held or personal service
figuring the charitable contributions
showing the computation of the deduction. deduction for the current tax year, the 10% corporation) contributes property other
Limitation on deduction. Under section limit is applied using the taxable income than cash and claims over a $500
163(j), business interest expense is after taking into account any deduction for deduction for the property, it must attach a
generally limited to the sum of business the NOL. statement to the return describing the kind
interest income, 30% of the adjusted To figure the amount of any remaining of property contributed and the method
taxable income, and floor plan financing NOL carryover to later years, taxable used to determine its FMV. Closely held
interest. The amount of any business income must be modified (see section corporations and personal service
interest expense that is not allowed as a 172(b)). To the extent that contributions corporations must complete Form 8283,
deduction for the tax year is carried are used to reduce taxable income for this Noncash Charitable Contributions, and
forward to the following year. If section purpose and increase an NOL carryover, a attach it to their returns. All other
163(j) applies, use Form 8990 to figure the contributions carryover is not allowed. See corporations must generally complete and
amount of business interest expense the section 170(d)(2)(B). attach Form 8283 to their returns for
corporation can deduct for the current tax contributions of property (other than
year and the amount that can be carried Suspension of 10% limitation for farm- money) if the total claimed deduction for
forward to the next year. See the ers and ranchers and certain Native all property contributed was more than
Instructions for Form 8990. Also see Corporations. Certain corporations can $5,000. Special rules apply to the
Schedule K, Question 23 and Question deduct contributions of qualified contribution of certain property. See the
24, later. conservation property without regard to Instructions for Form 8283.
Line 19. Charitable the general 10% limit. This applies to: Qualified conservation
• A qualified farmer or rancher (as
Contributions defined in section 170(b)(1)(E)(v)) that contributions. Special rules apply to
qualified conservation contributions,
Enter contributions or gifts actually paid does not have publicly traded stock; and including contributions of certain
within the tax year to or for the use of • A Native Corporation (as defined in easements on buildings located in a
charitable and governmental section 170(b)(2)(C)(iii)) that contributes registered historic district. See section
organizations described in section 170(c) property which was land conveyed under 170(h) and Pub. 526, Charitable
and any unused contributions carried over the Alaska Native Claims Settlement Act. Contributions.
from prior years. Special rules and limits The total amount of the contribution
apply to contributions to organizations claimed for the qualified conservation Other special rules. The corporation
conducting lobbying activities. See section property cannot exceed 100% of the must reduce its deduction for contributions
170(f)(9). excess of the corporation's taxable of certain capital gain property. See
income (as computed above substituting sections 170(e)(1) and 170(e)(5).
Corporations reporting taxable income “100%” for “10%” ) over all other allowable A larger deduction is allowed for certain
on the accrual method can elect to treat as charitable contributions. Any excess contributions including:
paid during the tax year any contributions qualified conservation contributions can • Inventory and other property to certain
paid by the due date for filing the be carried over to the next 15 years, organizations for use in the care of the ill,
corporation’s tax return (not including subject to the 100% limitation. See needy, or infants (see section 170(e)(3)),
extensions), if the contributions were sections 170(b)(2)(B) and (C). including qualified contributions of
authorized by the board of directors during “apparently wholesome food”; and
the tax year. Attach a declaration to the Cash contributions. For contributions of • Scientific equipment used for research
return stating that the resolution cash, check, or other monetary gifts to institutions of higher learning or to
authorizing the contributions was adopted (regardless of the amount), the certain scientific research organizations
by the board of directors during the tax corporation must maintain a bank record, (other than by personal holding
year. The declaration must include the or a receipt, letter, or other written

Instructions for Form 1120 -13-