Charitable Contribution of Real Estate From S Corp.

[Hamacher]

Client has piece of fully depreciated property that he wants to donate to charity. How much will he be able to deduct (FMV, Basis, etc.). It seems that it would be FMV but how is that treated on the S Corp. return (i.e. Schedule M1 adjustment)?

Thanks in advance.

[Uncle Sam]

Client has piece of fully depreciated property that he wants to donate to charity. How much will he be able to deduct (FMV, Basis, etc.). It seems that it would be FMV but how is that treated on the S Corp. return (i.e. Schedule M1 adjustment)?

Thanks in advance.

Doesn't make sense.
Was the land depreciated?

Donation value is ZERO if it's been fully depreciated since the donation value is the lower of cost or FMV.

However, the bookkeeping entry is to reverse out the property and charge AAA for the FMV.

[Roland Slugg]

The S Corp can deduct, subject to the 10% limitation and 5-year carryover, the FMV of the property on the date of the contribution. I would strongly recommend that an appraisal be obtained from a qualified appraiser.

Having said this, I suggest you first look into the Regs. regarding "Unrecaptured §1250 Gain" to see if this type of income is treated as "ordinary income" for purposes of applying the charitable deduction rules. Unrecaptured §1250 Gain is not "recapture," per se," but it may be treated as such when figuring the deductible charitable contribution amount. I don't know for sure and did not look into the Regs. to find out.

Btw, by "property" I assume you mean a building ... not land and not equipment. When referring to "property," it is a good idea to be specific. If the "property" being donated is personal property ... i.e. equipment subject to §1245 recapture ... then the charitable contribution deduction is the property's FMV reduced by all depreciation taken. In most cases this will yield a deduction of zero.

[Uncle Sam]

S Corp Donation of Real Estate

How can the S Corp deduct the contribution?

If at all, it's passed through to the shareholder.

[Hamacher]

Property

YES... The property in question is a building and the land. It has been fully depreciated.


Steve

[Hamacher]

Yes

How can the S Corp deduct the contribution?

If at all, it's passed through to the shareholder.

Correct it would be passed through. I just wanted to know how it would be recorded. Seems if your allowed a FMV deduction which is what I believe is allowed. How is it treated for book purposes? On the books it has $0 value.

Thanks again for any input!

[Hamacher]

Confused

The S Corp can deduct, subject to the 10% limitation and 5-year carryover, the FMV of the property on the date of the contribution. I would strongly recommend that an appraisal be obtained from a qualified appraiser.

Having said this, I suggest you first look into the Regs. regarding "Unrecaptured §1250 Gain" to see if this type of income is treated as "ordinary income" for purposes of applying the charitable deduction rules. Unrecaptured §1250 Gain is not "recapture," per se," but it may be treated as such when figuring the deductible charitable contribution amount. I don't know for sure and did not look into the Regs. to find out.

Btw, by "property" I assume you mean a building ... not land and not equipment. When referring to "property," it is a good idea to be specific. If the "property" being donated is personal property ... i.e. equipment subject to §1245 recapture ... then the charitable contribution deduction is the property's FMV reduced by all depreciation taken. In most cases this will yield a deduction of zero.

How can their be recapture? There is no income.