Certain Charitable Contributions Designated Transactions of Interest Under New Reportable Transaction Regulations |
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The IRS has issued Notice 2007-72, designating certain transactions as having the potential for tax avoidance or evasion and alerting participants to required disclosures and potential penalties. In these transactions, a taxpayer transfers a membership interest in a limited liability company that directly or indirectly owns real property to a section 501(c)(3) charitable organization or government entity, claiming a charitable contribution deduction for an amount significantly higher than the original purchase price paid by the taxpayer to acquire the interest. Charitable organizations that receive property in these transactions after August 14, 2007, are participants in these transactions for the first year in which their tax returns reflect the acquired interest, which is generally the year of receipt of the interest. For that year, the charity must disclose certain information to the IRS required by the reportable transaction regulations or be subject to penalties as described in the notice.
The IRS has begun notifying organizations that have participated in these transactions that they have been selected for examination.
Additional information:
News release
Sample examination letter and questionnaire
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Page Last Reviewed or Updated: January 07, 2009