Summary of the Allowance for Modification of Limitations on Charitable Contributions During 2020
Below is a summary of one of the provisions of Title II - Rebates and Other Individual Provisions and Business Provisions from the Coronavirus Aid, Relief and Economic Security Act (CARES Act).
Summary
- Increases the charitable contribution limitations for the 2020 tax year.
Detailed Analysis
Modifications to Charitable Contribution Limits
An individual can claim an unlimited itemized deduction for a qualified contribution that is made in 2020. Such contributions have historically been limited to 50% of the individual’s adjusted gross income. For a corporation, any qualified contribution is allowed as a deduction up to of 25% of the taxpayer's taxable income, up from 10%. If the aggregate of qualified contributions in a contribution year exceeds the preceding limitation, the excess can be carried over under IRC § 170(d)(2).
Qualified Contributions
A qualified contribution for these purposes must satisfy the following requirements:
- Must be made in cash during calendar year 2020;
- Must elect to have this contribution treated as such;
- Must be made to an organization described in IRC § 170(b)(1)(A); and
- Cannot be made to a supporting organization under IRC § 509(a)(3) or to a donor advised fund.
For a partnership or S Corporation, the election must be made by each partner or shareholder.
Contributions of Food
A C corporation may deduct for charitable contributions of food inventory up to 25% of the C Corporations taxable income (up from 15%). Similarly, a taxpayer other than a C Corporation may deduct for charitable contributions of food inventory up to 25% of the taxpayer's aggregate net income (up from 15%).
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.