Reforming the Charitable Contribution Substantiation Rules

In May 2012, the Tax Court issued two decisions denying income tax deductions for gifts to charitable organizations because they failed to meet the requirements for a qualified appraisal. These cases lit a firestorm of outrage in various circles, raising questions of how strictly substation rules should be applied. This paper reviews the rationales behind the charitable contribution substantiation rules, sets out the complicated regime regarding these rules and applicable case law, and presents a number of possible reforms. Balancing the need to control overvaluation with the need to encourage legitimate charitable contributions is a difficult but important challenge.

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