26 U.S.C. § 2522 — Charitable and similar gifts

Page 2644 TITLE 26—INTERNAL REVENUE CODE [§ 2521 come interest for life in any property to which this section applies shall be treated as a transfer of all interests in such property other than the qualifying income interest. (b) Property to which this subsection applies This section applies to any property if a de- duction was allowed with respect to the transfer of such property to the donor— (1) under section 2056 by reason of subsection (b)(7) thereof, or (2) under section 2523 by reason of subsection (f) thereof. (c) Cross reference For right of recovery for gift tax in the case of property treated as transferred under this section, see section 2207A(b). (Added Pub. L. 97–34, title IV, § 403(d)(3)(B)(i), Aug. 13, 1981, 95 Stat. 304; amended Pub. L. 97–448, title I, § 104(a)(3), (7), Jan. 12, 1983, 96 Stat. 2380, 2381.) Editorial Notes AMENDMENTS 1983—Pub. L. 97–448, § 104(a)(3)(B), amended directory language of Pub. L. 97–34, § 403(d)(3)(B)(i), to clarify that this section be inserted at end of subchapter B of chap- ter 12, rather than at end of subchapter B of chapter 11, and did not involve any change in text. Subsec. (a). Pub. L. 97–448, § 104(a)(3)(A), substituted ‘‘For purposes of this chapter and chapter 11, any dis- position’’ for ‘‘Any disposition’’ and ‘‘treated as a transfer of all interests in such property other than the qualifying income interest’’ for ‘‘treated as a transfer of such property’’. Subsec. (c). Pub. L. 97–448, § 104(a)(7), added subsec. (c). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97–448 effective, except as oth- erwise provided, as if it had been included in the provi- sion of the Economic Recovery Tax Act of 1981, Pub. L. 97–34, to which such amendment relates, see section 109 of Pub. L. 97–448, set out as a note under section 1 of this title. EFFECTIVE DATE Section applicable to gifts made after Dec. 31, 1981, see section 403(e)(2) of Pub. L. 97–34, set out as an Effec- tive Date of 1981 Amendment note under section 2056 of this title. Subchapter C—Deductions Sec. [2521. Repealed.] 2522. Charitable and similar gifts. 2523. Gift to spouse. 2524. Extent of deductions. Editorial Notes AMENDMENTS 1976—Pub. L. 94–455, title XX, § 2001(c)(2)(B)(ii), Oct. 4, 1976, 90 Stat. 1853, struck out item 2521 ‘‘Specific ex- emption’’. [§ 2521. Repealed. Pub. L. 94–455, title XX, § 2001(b)(3), Oct. 4, 1976, 90 Stat. 1849] Section, act Aug. 16, 1954, ch. 736, 68A Stat. 410, al- lowed a deduction, in the case of a citizen or resident, an exemption of $30,000, less amounts claimed and al- lowed for calendar year 1932 and calendar years inter- vening between that year and year for which tax is being computed. § 2522. Charitable and similar gifts (a) Citizens or residents In computing taxable gifts for the calendar year, there shall be allowed as a deduction in the case of a citizen or resident the amount of all gifts made during such year to or for the use of— (1) the United States, any State, or any po- litical subdivision thereof, or the District of Columbia, for exclusively public purposes; (2) a corporation, or trust, or community chest, fund, or foundation, organized and oper- ated exclusively for religious, charitable, sci- entific, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic fa- cilities or equipment), including the encour- agement of art and the prevention of cruelty to children or animals, no part of the net earn- ings of which inures to the benefit of any pri- vate shareholder or individual, which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political cam- paign on behalf of (or in opposition to) any candidate for public office; (3) a fraternal society, order, or association, operating under the lodge system, but only if such gifts are to be used exclusively for reli- gious, charitable, scientific, literary, or edu- cational purposes, including the encourage- ment of art and the prevention of cruelty to children or animals; (4) posts or organizations of war veterans, or auxiliary units or societies of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earnings insures to the benefit of any private shareholder or individual. Rules similar to the rules of section 501(j) shall apply for purposes of paragraph (2). (b) Nonresidents In the case of a nonresident not a citizen of the United States, there shall be allowed as a deduction the amount of all gifts made during such year to or for the use of— (1) the United States, any State, or any po- litical subdivision thereof, or the District of Columbia, for exclusively public purposes; (2) a domestic corporation organized and op- erated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or indi- vidual, which is not disqualified for tax ex- emption under section 501(c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (in- cluding the publishing or distributing of state- Page 2645 TITLE 26—INTERNAL REVENUE CODE § 2522 ments), any political campaign on behalf of (or in opposition to) any candidate for public of- fice; (3) a trust, or community chest, fund, or foundation, organized and operated exclu- sively for religious, charitable, scientific, lit- erary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influ- ence legislation, and which does not partici- pate in, or intervene in (including the pub- lishing or distributing of statements), any po- litical campaign on behalf of (or in opposition to) any candidate for public office; but only if such gifts are to be used within the United States exclusively for such purposes; (4) a fraternal society, order, or association, operating under the lodge system, but only if such gifts are to be used within the United States exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals; (5) posts or organizations of war veterans, or auxiliary units or societies of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earnings inures to the benefit of any private shareholder or individual. (c) Disallowance of deductions in certain cases (1) No deduction shall be allowed under this section for a gift to or for the use of an organiza- tion or trust described in section 508(d) or 4948(c)(4) subject to the conditions specified in such sections. (2) Where a donor transfers an interest in prop- erty (other than an interest described in section 170(f)(3)(B)) to a person, or for a use, described in subsection (a) or (b) and an interest in the same property is retained by the donor, or is trans- ferred or has been transferred (for less than an adequate and full consideration in money or money’s worth) from the donor to a person, or for a use, not described in subsection (a) or (b), no deduction shall be allowed under this section for the interest which is, or has been transferred to the person, or for the use, described in sub- section (a) or (b), unless— (A) in the case of a remainder interest, such interest is in a trust which is a charitable re- mainder annuity trust or a charitable remain- der unitrust (described in section 664) or a pooled income fund (described in section 642(c)(5)), or (B) in the case of any other interest, such in- terest is in the form of a guaranteed annuity or is a fixed percentage distributed yearly of the fair market value of the property (to be determined yearly). (3) Rules similar to the rules of section 2055(e)(4) shall apply for purposes of paragraph (2). (4) Reformations to comply with paragraph (2) (A) In general A deduction shall be allowed under sub- section (a) in respect of any qualified ref- ormation (within the meaning of section 2055(e)(3)(B)). (B) Rules similar to section 2055(e)(3) to apply For purposes of this paragraph, rules simi- lar to the rules of section 2055(e)(3) shall apply. (5) Contributions to donor advised funds A deduction otherwise allowed under sub- section (a) for any contribution to a donor ad- vised fund (as defined in section 4966(d)(2)) shall only be allowed if— (A) the sponsoring organization (as defined in section 4966(d)(1)) with respect to such donor advised fund is not— (i) described in paragraph (3) or (4) of subsection (a), or (ii) a type III supporting organization (as defined in section 4943(f)(5)(A)) which is not a functionally integrated type III sup- porting organization (as defined in section 4943(f)(5)(B)), and (B) the taxpayer obtains a contempora- neous written acknowledgment (determined under rules similar to the rules of section 170(f)(8)(C)) from the sponsoring organization (as so defined) of such donor advised fund that such organization has exclusive legal control over the assets contributed. (d) Special rule for irrevocable transfers of ease- ments in real property A deduction shall be allowed under subsection (a) in respect of any transfer of a qualified real property interest (as defined in section 170(h)(2)(C)) which meets the requirements of section 170(h) (without regard to paragraph (4)(A) thereof). (e) Special rules for fractional gifts (1) Denial of deduction in certain cases (A) In general No deduction shall be allowed for a con- tribution of an undivided portion of a tax- payer’s entire interest in tangible personal property unless all interests in the property are held immediately before such contribu- tion by— (i) the taxpayer, or (ii) the taxpayer and the donee. (B) Exceptions The Secretary may, by regulation, provide for exceptions to subparagraph (A) in cases where all persons who hold an interest in the property make proportional contributions of an undivided portion of the entire interest held by such persons. (2) Recapture of deduction in certain cases; ad- dition to tax (A) In general The Secretary shall provide for the recap- ture of an amount equal to any deduction al- lowed under this section (plus interest) with respect to any contribution of an undivided portion of a taxpayer’s entire interest in tangible personal property— (i) in any case in which the donor does not contribute all of the remaining inter- Page 2646 TITLE 26—INTERNAL REVENUE CODE § 2522 ests in such property to the donee (or, if such donee is no longer in existence, to any person described in section 170(c)) on or before the earlier of— (I) the date that is 10 years after the date of the initial fractional contribu- tion, or (II) the date of the death of the donor, and (ii) in any case in which the donee has not, during the period beginning on the date of the initial fractional contribution and ending on the date described in clause (i)— (I) had substantial physical possession of the property, and (II) used the property in a use which is related to a purpose or function consti- tuting the basis for the organizations’ exemption under section 501. (B) Addition to tax The tax imposed under this chapter for any taxable year for which there is a recap- ture under subparagraph (A) shall be in- creased by 10 percent of the amount so re- captured. (C) Initial fractional contribution For purposes of this paragraph, the term ‘‘initial fractional contribution’’ means, with respect to any donor, the first gift of an undivided portion of the donor’s entire inter- est in any tangible personal property for which a deduction is allowed under sub- section (a) or (b). (f) Cross references (1) For treatment of certain organizations pro- viding child care, see section 501(k). (2) For exemption of certain gifts to or for the benefit of the United States and for rules of con- struction with respect to certain bequests, see sec- tion 2055(f). (3) For treatment of gifts to or for the use of In- dian tribal governments (or their subdivisions), see section 7871. (Aug. 16, 1954, ch. 736, 68A Stat. 410; Pub. L. 85–866, title I, § 30(d), Sept. 2, 1958, 72 Stat. 1631; Pub. L. 91–172, title II, § 201(d)(3), (4)(C), (D), Dec. 30, 1969, 83 Stat. 561, 562; Pub. L. 91–614, title I, § 102(c)(2), Dec. 31, 1970, 84 Stat. 1841; Pub. L. 94–455, title XII, §§ 1307(d)(1)(B)(iv), (v), 1313(b)(3), title XIX, § 1902(a)(11), (12)(D), title XXI, § 2124(e)(3), Oct. 4, 1976, 90 Stat. 1727, 1730, 1805, 1806, 1920; Pub. L. 97–34, title IV, §§ 423(b), 442(c), Aug. 13, 1981, 95 Stat. 317, 322; Pub. L. 97–248, title II, § 286(b)(3), Sept. 3, 1982, 96 Stat. 570; Pub. L. 97–473, title II, § 202(b)(7), Jan. 14, 1983, 96 Stat. 2610; Pub. L. 98–369, div. A, title X, §§ 1022(c), 1032(b)(3), July 18, 1984, 98 Stat. 1028, 1034; Pub. L. 99–514, title XIV, § 1422(b), Oct. 22, 1986, 100 Stat. 2717; Pub. L. 100–203, title X, § 10711(a)(5), (6), Dec. 22, 1987, 101 Stat. 1330–464; Pub. L. 109–280, title XII, §§ 1218(c), 1234(c), Aug. 17, 2006, 120 Stat. 1082, 1101; Pub. L. 110–172, §§ 3(d)(2), 11(a)(16), Dec. 29, 2007, 121 Stat. 2474, 2485; Pub. L. 115–141, div. U, title IV, § 401(a)(204), Mar. 23, 2018, 132 Stat. 1194.) Editorial Notes CODIFICATION Sections 1218(c) and 1234(c) of Pub. L. 109–280, which directed the amendment of section 2522 without speci- fying the act to be amended, were executed to this sec- tion, which is section 2522 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress. See 2006 Amendment notes below. AMENDMENTS 2018—Subsec. (c)(1). Pub. L. 115–141 substituted ‘‘gift to or for’’ for ‘‘gift to of for’’. 2007—Subsec. (e)(1)(A). Pub. L. 110–172, § 11(a)(16)(A), in introductory provisions, substituted ‘‘all interests in the property are’’ for ‘‘all interest in the property is’’. Subsec. (e)(2). Pub. L. 110–172, § 3(d)(2)(A), (B), redesig- nated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows: ‘‘In the case of any additional contribution, the fair market value of such contribution shall be determined by using the lesser of— ‘‘(A) the fair market value of the property at the time of the initial fractional contribution, or ‘‘(B) the fair market value of the property at the time of the additional contribution.’’ Subsec. (e)(2)(A)(i). Pub. L. 110–172, § 11(a)(16)(B), sub- stituted ‘‘interests’’ for ‘‘interest’’ and ‘‘on or before’’ for ‘‘before’’. Subsec. (e)(2)(C). Pub. L. 110–172, § 3(d)(2)(C), added subpar. (C). Subsec. (e)(3). Pub. L. 110–172, § 3(d)(2)(B), redesig- nated par. (3) as (2). Subsec. (e)(4). Pub. L. 110–172, § 3(d)(2)(A), struck out heading and text of par. (4). Text read as follows: ‘‘For purposes of this subsection— ‘‘(A) ADDITIONAL CONTRIBUTION.—The term ‘addi- tional contribution’ means any gift for which a de- duction is allowed under subsection (a) or (b) of any interest in a property with respect to which the donor has previously made an initial fractional con- tribution. ‘‘(B) INITIAL FRACTIONAL CONTRIBUTION.—The term ‘initial fractional contribution’ means, with respect to any donor, the first gift of an undivided portion of the donor’s entire interest in any tangible personal property for which a deduction is allowed under sub- section (a) or (b).’’ 2006—Subsec. (c)(5). Pub. L. 109–280, § 1234(c), added par. (5). See Codification note above. Subsecs. (e), (f). Pub. L. 109–280, § 1218(c), added sub- sec. (e) and redesignated former subsec. (e) as (f). See Codification note above. 1987—Subsecs. (a)(2), (b)(2), (3). Pub. L. 100–203 in- serted ‘‘(or in opposition to)’’ after ‘‘on behalf of’’. 1986—Subsecs. (d), (e). Pub. L. 99–514 added subsec. (d) and redesignated former subsec. (d) as (e). 1984—Subsec. (c)(4). Pub. L. 98–369, § 1022(c), added par. (4). Subsec. (d). Pub. L. 98–369, § 1032(b)(3), added par. (1) and redesignated former pars. (1) and (2) as (2) and (3), respectively. 1983—Subsec. (d). Pub. L. 97–473 designated existing provisions as par. (1), substituted ‘‘bequests’’ for ‘‘gifts’’ second time appearing in par. (1) as so des- ignated, and added par. (2). 1982—Subsec. (a). Pub. L. 97–248 inserted provision that rules similar to rules of section 501(j) apply for purposes of par. (2). 1981—Subsec. (a). Pub. L. 97–34, § 442(c), substituted ‘‘year’’ for ‘‘quarter’’ in two places in provision pre- ceding par. (1). Subsec. (b). Pub. L. 97–34, § 442(c), substituted ‘‘year’’ for ‘‘quarter’’ in provision preceding par. (1). Subsec. (c)(3). Pub. L. 97–34, § 423(b), added par. (3). 1976—Subsec. (a)(1). Pub. L. 94–455, § 1902(a)(12)(D), struck out ‘‘Territory’’ after ‘‘any State’’. Subsec. (a)(2). Pub. L. 94–455, §§ 1307(d)(1)(B)(iv), 1313(b)(3), substituted ‘‘which is not disqualified for tax Page 2647 TITLE 26—INTERNAL REVENUE CODE § 2523 exemption under section 501(c)(3) by reason of attempt- ing to influence legislation’’ for ‘‘no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation’’ after ‘‘shareholder or individual’’ and inserted ‘‘or to foster national or international amateur sports competition (but only if no part of its activities involve the provi- sion of athletic facilities or equipment)’’ after ‘‘or edu- cational purposes’’. Subsec. (b)(1). Pub. L. 94–455, § 1902(a)(12)(D), struck out ‘‘Territory’’ after ‘‘any State’’. Subsec. (b)(2). Pub. L. 94–455, § 1307(d)(1)(B)(v), sub- stituted ‘‘which is not disqualified for tax exemption under section 501(c)(3) by reason of attempting to influ- ence legislation’’ for ‘‘no substantial part of the activi- ties of which is carrying on propaganda, or otherwise attempting, to influence legislation’’ after ‘‘share- holder or individual’’. Subsec. (c)(2). Pub. L. 94–455, § 2124(e)(3), substituted ‘‘(other than an interest described in section 170(f)(3)(B))’’ for ‘‘(other than a remainder interest in a personal residence or farm or an undivided portion of the donor’s entire interest in property)’’ after ‘‘an in- terest in property’’. Subsec. (d). Pub. L. 94–455, § 1902(a)(11), substituted subsec. (d) for former subsec. (d), pars. (1) through (10), which dealt with cross references to specific exemp- tions and rules of construction for gifts to the United States and its instrumentalities. 1970—Pub. L. 91–614 substituted ‘‘quarter’’ for ‘‘year’’ in three places. 1969—Subsecs. (a)(2), (b)(2), (3). Pub. L. 91–172, § 201(d)(4)(C), (D), inserted non-participation and non- intervention in political campaigns as an additional qualification. Subsec. (c). Pub. L. 91–172, § 201(d)(3), substituted sub- stantive provisions for simple reference to sections 503 and 681 in which such substantive provisions were for- merly set out. 1958—Subsec. (c). Pub. L. 85–866 substituted ‘‘503’’ for ‘‘504’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2007 AMENDMENT Amendment by section 3(d)(2) of Pub. L. 110–172 effec- tive as if included in the provisions of the Pension Pro- tection Act of 2006, Pub. L. 109–280, to which such amendment relates, see section 3(j) of Pub. L. 110–172, set out as a note under section 170 of this title. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by section 1218(c) of Pub. L. 109–280 appli- cable to contributions, bequests, and gifts made after Aug. 17, 2006, see section 1218(d) of Pub. L. 109–280, set out as a note under section 170 of this title. Amendment by section 1234(c) of Pub. L. 109–280 appli- cable to contributions made after the date which is 180 days after Aug. 17, 2006, see section 1234(d) of Pub. L. 109–280, set out as a note under section 170 of this title. EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–203 applicable with re- spect to activities after Dec. 22, 1987, see section 10711(c) of Pub. L. 100–203, set out as a note under sec- tion 170 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 applicable to transfers and contributions made after Dec. 31, 1986, see section 1422(e) of Pub. L. 99–514, set out as a note under section 2055 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by section 1022(c) of Pub. L. 98–369 appli- cable to reformations after Dec. 31, 1978, but inappli- cable to any reformation to which section 2055(e)(3) of this title as in effect before July 18, 1984, applies, see section 1022(e)(1) of Pub. L. 98–369, set out as a note under section 2055 of this title. Amendment by section 1032(b)(3) of Pub. L. 98–369 ap- plicable to taxable years beginning after July 18, 1984, see section 1032(c) of Pub. L. 98–369, set out as a note under section 170 of this title. EFFECTIVE DATE OF 1983 AMENDMENT For effective date of amendment by Pub. L. 97–473, see section 204(4) of Pub. L. 97–473, set out as an Effec- tive Date note under section 7871 of this title. EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97–248 effective Oct. 5, 1976, see section 286(c) of Pub. L. 97–248, set out as a note under section 501 of this title. EFFECTIVE DATE OF 1981 AMENDMENT Pub. L. 97–34, title IV, § 423(c)(2), Aug. 13, 1981, 95 Stat. 317, provided that: ‘‘The amendment made by sub- section (b) [amending this section] shall apply to trans- fers after December 31, 1981.’’ Amendment by section 442(c) of Pub. L. 97–34 applica- ble with respect to gifts made after Dec. 31, 1981, see section 442(e) of Pub. L. 97–34, set out as a note under section 2501 of this title. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 2124(e)(3) of Pub. L. 94–455 ap- plicable with respect to contributions or transfers made after June 13, 1976, see section 2124(e)(4) of Pub. L. 94–455, set out as a note under section 170 of this title. EFFECTIVE DATE OF 1970 AMENDMENT Amendment by Pub. L. 91–614 applicable with respect to gifts made after Dec. 31, 1970, see section 102(e) of Pub. L. 91–614, set out as a note under section 2501 of this title. EFFECTIVE DATE OF 1969 AMENDMENT Amendment by section 201(d)(3) of Pub. L. 91–172 ap- plicable to gifts made after Dec. 31, 1969, except that the amendment of par. (2) of subsec. (c) applicable to gifts made after July 31, 1969, see section 201(g)(4)(D) of Pub. L. 91–172, set out as a note under section 170 of this title. Amendment by section 201(d)(4)(C), (D) of Pub. L. 91–172 applicable to gifts and transfers made after Dec. 31, 1969, see section 201(g)(4)(E) of Pub. L. 91–172, set out as a note under section 170 of this title. CHARITABLE LEAD TRUSTS AND CHARITABLE REMAINDER TRUSTS IN CASE OF INCOME AND GIFT TAXES For inclusion of provisions comparable to section 2055(e)(3) of this title in this section, see section 514(b) of Pub. L. 95–600, set out as a note under section 2055 of this title. § 2523. Gift to spouse (a) Allowance of deduction Where a donor transfers during the calendar year by gift an interest in property to a donee who at the time of the gift is the donor’s spouse, there shall be allowed as a deduction in com- puting taxable gifts for the calendar year an amount with respect to such interest equal to its value. (b) Life estate or other terminable interest Where, on the lapse of time, on the occurrence of an event or contingency, or on the failure of an event or contingency to occur, such interest transferred to the spouse will terminate or fail, no deduction shall be allowed with respect to such interest—