Skip to main content
No. of Recommendations: 3
Treasury Decision 9864

Here the IRS has ruled that any property tax credit given by the state for 'charitable contribution' to a charity whose purpose is paying property taxes, the amount of property tax credit given must reduce the amount of the charitable contribution.

This was an attempt to essentially shift property and/or state tax in excess of $10,000 to a Fed tax deductible charitable contribution. Nice try! But it surprises me this ever became an issue, as the standard IRS Doctrine of no double-benefit seems glaringly least to me it does. If I make a deductible charitable contribution from which I derive a financial this case my property taxes being paid for me.... the rule has always been that I must reduce my charitable deduction by the amount of the economic benefit I derive from it.

However, the IRS does not require the Federal charitable deduction to be reduced if the charity gives credit for state tax, which I think is another way of saying the SALT deduction cap does not apply to state tax computation.

Another kind of interesting point in the ruling is the Fed charitable deduction does not have to be reduced if the amount of credit the state gives towards state/property tax is less than 15% of the contribution. Hmmm. I wonder why that's in there? I mean, who is going to give $Thousands to a bogus state/local government charity just to get a 15% property tax credit?

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.