No. of Recommendations: 3
Treasury Decision 9864 https://www.irs.gov/newsroom/final-regulations-on-charitable...

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 obvious...at least to me it does. If I make a deductible charitable contribution from which I derive a financial benefit...in 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?

BruceM
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