Substantiation and Reporting Requirements for Cash and Noncash Charitable Contribution Deductions, 36417-36428 [2018-15734]

Agencies

• Internal Revenue Service
• DEPARTMENT OF THE TREASURY

[Federal Register Volume 83, Number 146 (Monday, July 30, 2018)]
[Rules and Regulations]
[Pages 36417-36428]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-15734]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 9836]
RIN 1545-BH62


Substantiation and Reporting Requirements for Cash and Noncash 
Charitable Contribution Deductions

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

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SUMMARY: These final regulations provide guidance concerning 
substantiation and reporting requirements for cash and noncash 
charitable contributions. The final regulations reflect the enactment 
of provisions of the American Jobs Creation Act of 2004 and the Pension 
Protection Act of 2006. These regulations provide guidance to 
individuals, partnerships, and corporations that make charitable 
contributions.

DATES: Effective date: These regulations are effective on July 30, 
2018.
    Applicability dates: For dates of applicability, see Sec. Sec.  
1.170A-1(k), 1.170A-14(j), 1.170A-15(h), 1.170A-16(g), 1.170A-17(c), 
1.170A-18(d), 1.664-1(f), and 1.6050L-1(h).

FOR FURTHER INFORMATION CONTACT: Charles Gorham at (202) 317-7003 (not 
a toll-free number).

SUPPLEMENTARY INFORMATION: 

Paperwork Reduction Act

    The collections of information contained in these final regulations 
have been reviewed and approved by the Office of Management and Budget 
in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)) under control number 1545-1953.
    The collections of information in these final regulations are in 
Sec. Sec.  1.170A-15(a) and (d)(1); 1.170A-16(a), (b), (c), (d), (e), 
and (f); and 1.170A-18(a)(2) and (b). These collections of information 
are required to obtain a benefit and will enable the IRS to determine 
if a taxpayer is entitled to a claimed deduction for a charitable 
contribution.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a valid 
control number.
    Books or records relating to a collection of information must be 
retained as long as their contents may become material in the 
administration of any internal revenue law. Generally, tax returns and 
return information are confidential, as required by section 6103.

Background

    This document contains amendments to the Income Tax Regulations, 26 
CFR parts 1 and 602, relating to substantiating and reporting 
deductions for charitable contributions under section 170 of the 
Internal Revenue Code. These final regulations reflect amendments to 
section 170 made by section 883 of the American Jobs Creation Act of 
2004, Public Law 108-357 (118 Stat. 1418, 1631) (Jobs Act), and 
sections 1216, 1217, and 1219 of the Pension Protection Act of 2006, 
Public Law 109-280 (120 Stat. 780, 1079-83) (PPA), which added new 
rules for substantiating charitable contributions. The final 
regulations also update cross-references to the section 170 regulations 
in other regulations.
    Section 170(f)(8), which has been in the Code since 1993, provides 
that no deduction shall be allowed for any contribution of $250 or 
more, cash or noncash, unless the taxpayer substantiates the 
contribution with a contemporaneous written acknowledgment of the 
contribution by the donee organization. The contemporaneous written 
acknowledgment must include: (1) The amount of cash and a description 
(but not value) of any property other than cash contributed; (2) a 
statement of whether the donee organization provided any goods or 
services in consideration, in whole or in part, for any such cash or 
property; and (3) a description and good faith estimate of the value of 
any such goods or services or, if such goods or services consist solely 
of intangible religious benefits, a statement to that effect.
    Section 170(f)(11), as added by section 883 of the Jobs Act, 
restates, in part, section 155(a) of the Deficit Reduction Act of 1984 
and contains reporting and substantiation requirements relating to the 
allowance of deductions for noncash charitable contributions. Under 
section 170(f)(11)(C), taxpayers are required to obtain a qualified 
appraisal for donated property for which a deduction of more than 
$5,000 is claimed.
    Under section 170(f)(11)(D), a qualified appraisal must be attached 
to any tax return claiming a deduction of more than $500,000. Section 
170(h)(4)(B), as added by section 1213 of the PPA, adds the requirement 
that a qualified appraisal must be included with the taxpayer's return 
for the taxable year of the contribution for any contribution of a 
qualified real property interest that is a restriction as to the 
exterior of a building described in section 170(h)(4)(C)(ii).
    Section 170(f)(11)(E), as amended by section 1219 of the PPA, 
provides statutory definitions of qualified appraisal and qualified 
appraiser for appraisals prepared with respect to returns filed after 
August 17, 2006.
    Section 170(f)(11)(E)(i) provides that the term qualified appraisal 
means an appraisal that is (1) treated as a qualified appraisal under 
regulations or other guidance prescribed by the Secretary, and (2) 
conducted by a qualified appraiser in accordance with generally 
accepted appraisal standards and any regulations or other guidance 
prescribed by the Secretary.
    Section 170(f)(11)(E)(ii) provides that the term qualified 
appraiser means an individual who (1) has earned an appraisal 
designation from a recognized professional appraiser organization or 
has otherwise met minimum education and experience requirements set 
forth in regulations prescribed by the Secretary, (2) regularly 
performs appraisals for which the individual receives compensation, and 
(3) meets such other requirements as may be prescribed by the Secretary 
in regulations or other

[[Page 36418]]

guidance. Section 170(f)(11)(E)(iii) provides that an individual will 
not be treated as a qualified appraiser with respect to any specific 
appraisal unless that individual (1) demonstrates verifiable education 
and experience in valuing the type of property subject to the 
appraisal, and (2) has not been prohibited from practicing before the 
IRS by the Secretary under section 330(c) of Title 31 of the United 
States Code at any time during the 3-year period ending on the date of 
the appraisal.
    On October 19, 2006, the Treasury Department and the IRS released 
Notice 2006-96, 2006-2 CB 902 (see Sec.  601.601(d)(2)(ii)(b)), which 
provides transitional guidance on the definitions of qualified 
appraisal and qualified appraiser that apply on and after the effective 
date of the PPA definitions.
    Section 170(f)(16) as added by section 1216 of the PPA generally 
provides that no deduction is allowed for a contribution of clothing or 
a household item unless the clothing or household item is in good used 
condition or better.
    Section 170(f)(17) as added by section 1217 of the PPA imposes a 
recordkeeping requirement for all cash contributions, regardless of 
amount. Specifically, section 170(f)(17) requires a donor to maintain 
as a record of any cash, check, or other monetary gift (1) a bank 
record, or (2) a written communication from the donee. The record must 
show the name of the donee organization, the date of the contribution, 
and the amount of the contribution.
    On December 2, 2006, the Treasury Department and the IRS released 
Notice 2006-110, 2006-2 CB 1127 (see Sec.  601.601(d)(2)(ii)(b)), which 
provides rules under section 170(f)(17) for substantiating charitable 
contributions made by payroll deduction.
    On January 8, 2008, the Treasury Department and the IRS released 
Notice 2008-16, 2008-1 CB 315 (see Sec.  601.601(d)(2)(ii)(b)), which 
provides rules under section 170(f)(17) for substantiating a one-time, 
lump-sum charitable contribution of a cash, check, or other monetary 
gift made through the Combined Federal Campaign (CFC) or a similar 
program. Taxpayers may rely on Notice 2006-96, Notice 2006-110, and 
Notice 2008-16 prior to the effective date of these final regulations.
    On August 7, 2008, the Treasury Department and the IRS provided 
guidance on complying with section 170 as amended by the Jobs Act and 
the PPA in a notice of proposed rulemaking (REG-140029-07) in the 
Federal Register (73 FR 45908). The Treasury Department and the IRS 
received comments responding to the notice of proposed rulemaking, and 
a public hearing was held on January 23, 2009. Copies of the comments 
received are available for public inspection at www.regulations.gov or 
upon request. After consideration of the comments received, the 
Treasury Department and the IRS adopt the proposed regulations as 
revised by this Treasury decision. The revisions are discussed in this 
preamble.

Explanation of Provisions and Summary of Comments

    The final regulations implement changes made by the Jobs Act and 
PPA to the substantiation and reporting rules for charitable 
contributions under section 170. The final regulations set forth the 
substantiation requirements for contributions of more than $500 under 
section 170(f)(11)(B) through (D) (added by the Jobs Act); the new 
definitions of qualified appraisal and qualified appraiser applicable 
to noncash contributions under section 170(f)(11)(E) (added by the 
PPA); substantiation requirements for contributions of clothing and 
household items under section 170(f)(16) (added by the PPA); and 
recordkeeping requirements for all cash contributions under section 
170(f)(17) (added by the PPA).
    In addition, these final regulations amend the heading of Sec.  
1.170A-13 to alert readers to the updated regulations. The final 
regulations also update cross-references to the section 170 regulations 
in other regulations.

I. Cash, Check, or Other Monetary Gift Substantiation Requirements

    Section 1.170A-15 implements the requirements of section 170(f)(17) 
for cash, check, or other monetary gift contributions, as added by the 
PPA, and clarifies that these rules supplement the substantiation rules 
in section 170(f)(8).

A. Contributions Made to a Distributing Organization

    A donor may make a charitable contribution of cash, check, or other 
monetary gift to an organization that collects contributions and 
distributes them to ultimate recipient organizations (pursuant to the 
donor's instructions or otherwise). The final regulations adopt the 
general rule of the proposed regulations that treats as a donee for 
purposes of sections 170(f)(8) and 170(f)(17) an organization described 
in section 170(c) or a Principal Combined Fund Organization (PCFO) for 
purposes of the Combined Federal Campaign (CFC) and acting in that 
capacity. The CFC is a workplace giving campaign established by 
Executive Order 10728, as amended by Executive Orders 10927, 12353, and 
12404, and administered by the United States Office of Personnel 
Management (OPM). A PCFO administers the local campaign and acts as a 
fiscal agent for the CFC.
1. Blank Pledge Card Is Not Substantiation
    Some commenters asked whether a blank pledge card provided by a 
donee organization but filled out by the donor constitutes adequate 
substantiation for a contribution of cash to a distributing 
organization. Section 170(f)(17) requires a taxpayer to maintain as a 
record of a contribution of a cash, check, or other monetary gift 
either a bank record or a written communication from the donee that 
shows the name of the donee organization, the date of the contribution, 
and the amount of the contribution. The proposed and final regulations 
at Sec.  1.170A-15(b)(2) provide that a bank record includes a 
statement from a financial institution, an electronic fund transfer 
receipt, a canceled check, a scanned image of both sides of a canceled 
check obtained from a bank website, or a credit card statement. In 
addition, the proposed and final regulations provide that a written 
communication includes an email. Because a blank pledge card provided 
by the donee organization to a donor does not show the information 
required under section 170(f)(17), it is not sufficient substantiation 
for a cash, check, or other monetary gift.
2. Name of Donee for Purposes of CFC
    One commenter noted that because the CFC generally does not include 
the name of the donee organization on its pledge cards, and a PCFO for 
purposes of the CFC often is a potential ultimate recipient of a 
contribution to the CFC, including the name of the PCFO on the pledge 
card could unduly influence donors to contribute to the PCFO rather 
than to other eligible donees. The commenter asked that the name of the 
local CFC campaign be treated as the name of the donee organization. 
The Treasury Department and the IRS agree with this comment. 
Accordingly, Sec.  1.170A-15(d)(2)(ii) provides that the name of the 
local CFC may be used instead of the name of the PCFO and may be 
treated as the donee organization for purposes of sections 170(f)(8) 
and 170(f)(17) and Sec.  1.170A-15(d)(1)(ii).

B. Compliance With 170(f)(8) and 170(f)(17) in a Single Document

    Some commenters asked if a single written acknowledgment can be 
used to

[[Page 36419]]

satisfy the substantiation rules under sections 170(f)(8) and 
170(f)(17). Section 170(f)(8) does not require that a contemporaneous 
written acknowledgment by the donee organization include the date of 
the contribution. In addition, section 170(f)(17) does not require that 
a written communication from the donee include a statement of whether 
any goods or services were provided in exchange for the contribution. 
Although there are different requirements under sections 170(f)(8) and 
170(f)(17), Sec.  1.170A-15(a)(3) of the final regulations provides 
that a single written acknowledgment that satisfies all substantiation 
requirements under both sections 170(f)(8) and 170(f)(17) is adequate 
substantiation for contributions of a cash, check, or other monetary 
gift.

II. Noncash Substantiation Requirements

    Section 1.170A-16 implements the requirements of section 170(f)(11) 
for noncash contributions, as added by the Jobs Act, and clarifies that 
these rules are in addition to the requirements in section 170(f)(8).
    Proposed and final Sec.  1.170A-16 provide that a donor who claims 
a deduction for a noncash contribution of less than $250 is required 
only to obtain a receipt from the donee or keep reliable records. A 
donor who claims a noncash contribution of at least $250 but not more 
than $500 is required only to obtain a contemporaneous written 
acknowledgment, as provided under section 170(f)(8) and Sec.  1.170A-
13(f). For claimed noncash contributions of more than $500 but not more 
than $5,000, the donor must obtain a contemporaneous written 
acknowledgment and must also file a completed Form 8283 (Section A), 
``Noncash Charitable Contributions,'' with the return on which the 
deduction is claimed. For claimed noncash contributions of more than 
$5,000, in addition to a contemporaneous written acknowledgment, the 
donor generally must obtain a qualified appraisal and must also 
complete and file either Section A or Section B of Form 8283 (depending 
on the type of property contributed) with the return on which the 
deduction is claimed. For claimed noncash contributions of more than 
$500,000, the donor must also attach a copy of the qualified appraisal 
to the return for the taxable year in which the contribution is made.
    Section 170(f)(11)(F) provides that for purposes of the $500, 
$5,000, and $500,000 thresholds in section 170(f)(11), similar items 
contributed during the taxable year are treated as one property. In 
determining whether a contribution meets the $250 threshold, Sec.  
1.170A-13(f)(1) provides that separate contributions made during the 
tax year, regardless of whether the sum of those contributions equal or 
exceed $250, are not combined. The proposed and final regulations also 
provide that the requirements for substantiation that must be submitted 
with a return also apply to the return for any carryover year under 
section 170(d).

A. Reasonable Cause Exception

    In light of recent case law (see Crimi v. Commissioner, T.C. Memo. 
2013-51), the paragraph relating to the reasonable cause exception set 
forth in proposed regulation Sec.  1.170A-16(f)(6) has been deleted 
from the final regulations because it is inconsistent with the Tax 
Court's position. In Crimi, the IRS argued that there was no qualified 
appraisal. The Tax Court discussed the doctrine of substantial 
compliance with respect to the qualified appraisal regulation, but 
stated that it was unnecessary to decide whether it was applicable to 
the petitioners' case because they established that the failure was due 
to reasonable cause. Specifically, the court stated that a reasonable 
cause inquiry is ``inherently a fact-intensive one, and facts and 
circumstances must be judged on a case-by-case basis.'' Id. at *99. The 
court found that petitioners reasonably and in good faith relied on 
their long-time certified public accountant's advice that their 
appraisal met all the legal requirements to claim the deduction. Thus, 
the final regulations do not contain a standard for the reasonable 
cause exception.

B. Appraiser Privacy Concerns

    A number of commenters expressed concern over appraisers' privacy 
if the appraiser's social security number is required on qualified 
appraisals and Forms 8283 (Section B). This concern was addressed by 
the proposed regulations. Both the proposed and final regulations 
require an appraiser to use a taxpayer identification number on an 
appraisal, but that number does not need to be the appraiser's social 
security number. An appraiser may use an employer identification 
number, which may be obtained by: (1) Applying on the IRS website 
(www.regulationsgov); or (2) filing a completed Form SS-4, Application 
for Employer Identification Number, by mail or by fax. The IRS has 
modified the instructions to Form 8283 to make clear that an appraiser 
may use either a social security number or an employer identification 
number.

C. Form 8283 Is Not a Contemporaneous Written Acknowledgment

    One commenter asked whether a Form 8283 can satisfy the requirement 
for a contemporaneous written acknowledgment under section 170(f)(8). 
Although no format is prescribed for a contemporaneous written 
acknowledgment (for example, an email may qualify), a contemporaneous 
written acknowledgment of a contribution by the donee organization must 
contain all of the information required by section 170(f)(8)(B). 
Moreover, section 170(f)(8)(A) states that the acknowledgment is made 
``by the donee organization.'' Only Section B, part IV of Form 8283, 
completed for property valued at over $5,000, is a donee 
acknowledgment, and this acknowledgment only contains some of the 
information required by section 170(f)(8)(B). Accordingly, even a 
fully-completed Form 8283 does not satisfy the requirements of section 
170(f)(8).

D. Form 8283 (Section B) Provided to Donee

    Another commenter suggested that the Form 8283 (Section B) should 
be required to be fully completed, including the appraiser information 
and the appraised or claimed value of the property, before the donor 
obtains the donee's signature. Section 1.170A-16(d)(5)(iii) of the 
proposed regulations provides that specific portions of the Form 8283 
(Section B) must be completed before it is signed by the donee, but 
that the Form 8283 (Section B) does not need to contain certain other 
information, such as the appraiser information and the appraised or 
claimed value of the property, before the donee signs the form. 
Regardless of any benefits that may result from additional information 
sharing, the public should have the opportunity to comment on any 
proposed requirement to share additional information with the donee. 
Accordingly, the final regulations adopt the proposed regulation 
language without adoption of this suggestion.

E. Attaching Appraisal to Carryover Year Returns

    One commenter suggested deleting the requirement in the regulations 
to attach an appraisal to the tax returns for carryover years. Because 
the need for the IRS to have the appraisal attached to each return 
reflecting a contribution in excess of $500,000 outweighs the burden on 
taxpayers to supply it, the final regulations retain this requirement. 
Accordingly, if the appraisal is required to be attached to the return 
for the

[[Page 36420]]

contribution year, it must also be attached to the returns for the 
carryover years.

III. New Requirements for Qualified Appraisals and Qualified Appraisers

    As prescribed in section 170(f)(11)(E), as amended by the PPA, 
Sec.  1.170A-17 of the proposed and final regulations provides 
definitions for qualified appraisal and qualified appraiser.

A. Transitional Rule

    One commenter suggested that a transitional rule be included for 
Sec.  1.170A-17 because additional time may be needed to meet the 
education and experience requirements in Sec.  1.170A-17 for qualified 
appraisers. In order to provide appraisers with a reasonable amount of 
time to meet the new education and experience requirements, the final 
rules under Sec.  1.170A-17 apply only to contributions made on or 
after January 1, 2019.

B. Definition of Generally Accepted Appraisal Standards

    Section 170(f)(11)(E)(i)(II) provides that the term qualified 
appraisal means an appraisal that is conducted by a qualified appraiser 
in accordance with generally accepted appraisal standards. Generally 
accepted appraisal standards are defined in the proposed regulations at 
Sec.  1.170A-17(a)(2) as the ``substance and principles of the Uniform 
Standards of Professional Appraisal Practice [USPAP], as developed by 
the Appraisal Standards Board of the Appraisal Foundation.'' Several 
commenters recommended that the final regulations require appraisal 
documents to be prepared ``in accordance with USPAP'' and not merely in 
accordance with the ``substance and principles of USPAP.'' Other 
commenters indicated that strict compliance with USPAP would eliminate 
use of all other appraisal standards, including some that are generally 
accepted in the appraisal industry. The Treasury Department and the IRS 
agree that it is beneficial to provide some flexibility by requiring 
conformity with appraisal standards that are consistent with the 
substance and principles of USPAP rather than requiring that all 
appraisals be prepared strictly in accordance with USPAP. Accordingly, 
the final regulations do not adopt the recommendation to require strict 
compliance with USPAP and retain the requirement of consistency with 
the substance and principles of USPAP.

C. Education and Experience Requirement for Qualified Appraisers

    Section 170(f)(11)(E)(ii)(I) and (iii)(I) and Sec.  1.170A-17(b) of 
the proposed regulations provide that a qualified appraiser is an 
individual with verifiable education and experience in valuing the type 
of property for which the appraisal is performed. Some commenters 
reiterated suggestions made in response to Notice 2006-96 that the 
final regulations interpret the requirement in section 170(f)(11)(E) 
that a qualified appraiser have verifiable ``education and experience'' 
as requiring verifiable ``education or experience.'' The Treasury 
Department and the IRS did not adopt this suggestion in the proposed 
regulations, and do not do so in the final regulations, because it 
would be contrary to the clear language of the statute.
    Section 1.170A-17(b)(4) of the proposed regulations requires an 
appraiser to specify in the appraisal the appraiser's education and 
experience in valuing the type of property and to make a declaration in 
the appraisal that, because of the appraiser's education and 
experience, the appraiser is qualified to make appraisals of the type 
of property being valued. A commenter suggested that, to meet the 
``verifiable'' requirement in Sec.  1.170A-17(b), the appraiser should 
be required to specify in the appraisal only that the appraiser is a 
qualified appraiser under Sec.  1.170A-17(b) and that the appraisal was 
prepared in accordance with the substance and principles of USPAP. The 
general statement of qualification suggested by the commenter does not 
demonstrate, as required under section 170(f)(11)(E)(iii)(I), that the 
appraiser has verifiable education and experience that qualifies the 
appraiser to prepare the appraisal for that type of property. 
Accordingly, the final regulations do not adopt this suggestion.

D. Parity Between ``Designation'' and ``Education and Experience''

    Section 1.170A-17(b)(2)(i) of the proposed regulations provides 
that an individual is treated as having education and experience in 
valuing the type of property if, as of the date the individual signs 
the appraisal, the individual has satisfied the following requirements: 
(A) Successfully completed professional or college-level coursework in 
valuing the type of property and has two or more years of experience in 
valuing the type of property; or (B) earned a recognized appraiser 
designation for the type of property. One commenter suggested that it 
is much more difficult to earn a designation from a generally 
recognized professional appraiser organization under Sec.  1.170A-
17(b)(2)(i)(B) than to satisfy the education and experience 
requirements under Sec.  1.170A-17(b)(2)(i)(A). The commenter suggested 
that the education and experience requirements be made more stringent. 
In enacting section 170(f)(11)(E), Congress intended to improve the 
accuracy of deductions claimed for noncash contributions by requiring 
qualified appraisers to meet more stringent qualification standards, 
including by requiring that both education and experience requirements 
be met. See H.R. Rep. No. 108-548, pt. 1, at 356 (2004). The 
requirements for education and experience in the proposed regulations 
are sufficiently stringent as intended by Congress. Accordingly, the 
final regulations do not adopt this suggestion and retain without 
modification the requirements for education and experience in the 
proposed regulations.

E. Satisfying Verifiable Education Requirement

    Section 170(f)(11)(E)(iii)(I) requires verifiable education and 
experience in valuing the type of property subject to the appraisal. 
Section 1.170A-17(b)(2)(i)(A) of the proposed regulations provides that 
an individual is treated as having education and experience in valuing 
the type of property if, as of the date the individual signs the 
appraisal, the individual has successfully completed (for example, 
received a passing grade on a final examination) professional or 
college-level coursework in valuing the type of property, and has two 
or more years of experience in valuing the type of property. One 
commenter asked whether attendance at a training event that does not 
include a final examination meets the requirement of successful 
completion of coursework. The reference to a passing grade on a final 
examination in Sec.  1.170A-17(b)(2)(i)(A) is merely an example of what 
is considered successful completion of professional or college-level 
coursework, and other evidence of successful completion may be 
sufficient. However, mere attendance at a training event is not 
sufficient, and evidence of successful completion of coursework is 
necessary under the final regulations.

F. Education Provided by Trade Organization

    Two commenters pointed out that, in addition to generally 
recognized professional appraiser organizations, a generally recognized 
professional trade organization may provide coursework

[[Page 36421]]

that satisfies the requirement for verifiable education in valuing the 
type of property under Sec.  1.170A-17(b)(2)(i)(A) and (ii)(B). The 
Treasury Department and the IRS agree with this comment, and the final 
regulations provide that an appraiser also can satisfy Sec.  1.170A-
17(b)(2)(i)(A) and (ii)(B) by successfully completing coursework in 
valuing the type of property from a generally recognized professional 
trade organization.

G. Examples of Generally Recognized Professional Appraiser 
Organizations

    Some commenters objected to the references in the proposed 
regulations to designations conferred by one particular organization as 
examples of recognized appraiser designations. The Treasury Department 
and the IRS do not require or prefer the designation of any particular 
appraiser organization, and, therefore, the final regulations do not 
contain examples of any designations.

IV. Additional Comments

    A number of commenters requested that the Treasury Department and 
the IRS provide that the final regulations apply to charitable 
contributions for all federal tax purposes, including estate and gift 
tax. These regulations are promulgated under Jobs Act and PPA 
provisions that apply only to income tax deductions for charitable 
contributions under section 170. No substantive changes were made to 
the proposed regulations in response to these comments because these 
comments were beyond the scope of the proposed regulations.
    Some commenters suggested that appraisers be allowed to use certain 
IRS valuation tables, such as those for charitable remainder trusts, 
other remainder interests in property, and life insurance policies, 
instead of a qualified appraisal. These tables may be used to value 
property in certain other contexts, but they do not necessarily provide 
a fair market value of the property contributed. Therefore, these 
tables are not acceptable substitutes for a qualified appraisal to 
substantiate deductions for charitable contributions under section 170.
    Another commenter suggested that taxpayers should not be required 
to substantiate their charitable contribution deduction with a 
qualified appraisal when they purchase medical equipment, such as a 
Magnetic Resonance Imaging (MRI) machine, and donate the equipment to a 
qualified organization. The purchase price of the medical equipment may 
differ from its fair market value. A qualified appraisal prepared by a 
qualified appraiser is required to determine the fair market value at 
the time of contribution. Therefore, no changes were made to the 
proposed regulations in response to this comment.

Effect on Other Documents

    Notice 2006-96 provides transitional guidance on the definitions of 
qualified appraisal and qualified appraiser under section 170(f)(11). 
Notice 2006-110 provides transitional guidance under section 170(f)(17) 
for substantiating charitable contributions made by payroll deduction. 
Notice 2008-16 provides transitional guidance under section 170(f)(17) 
for substantiating a one-time, lump-sum charitable contribution of a 
cash, check, or other monetary gift made through the CFC or a similar 
program. All three notices provide that taxpayers may rely on the 
notices until final regulations are effective. Accordingly, Notice 
2006-110 and Notice 2008-16 are obsolete as of July 30, 2018 and Notice 
2006-96 is obsolete as of January 1, 2019.

V. Applicability Dates

    In general, Sec. Sec.  1.170A-15, 1.170A-16, and 1.170A-18 apply to 
contributions made after July 30, 2018. Section 1.170A-17 applies to 
contributions made on or after January 1, 2019. Taxpayers are reminded 
that the effective dates of the Jobs Act and the PPA relating to 
substantiating and reporting charitable contributions precede the 
effective date of these final regulations, and the Jobs Act and the PPA 
apply in accordance with their applicability dates. See Notice 2006-96.

Special Analyses

    This regulation is not subject to review under section 6(b) of 
Executive Order 12866 pursuant to the Memorandum of Agreement (April 
11, 2018) between the Department of the Treasury and the Office of 
Management and Budget regarding review of tax regulations. Further it 
is hereby certified that these regulations will not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
a Regulatory Flexibility Analysis under the Regulatory Flexibility Act 
(5 U.S.C. chapter 6) is not required. Although this rule could affect a 
substantial number of small entities, any economic impact is expected 
to be minimal. The final rule provides clarifications and 
simplifications to the existing substantiation and reporting 
requirements for charitable contributions and are designed to reduce 
the burden on taxpayers. Further, any substantiation and reporting 
rules contained in these final regulations that are in addition to the 
rules in current regulations reflect statutory substantiation and 
reporting requirements. Pursuant to section 7805(f) of the Internal 
Revenue Code, the notice of proposed rulemaking preceding this 
regulation was submitted to the Chief Counsel for Advocacy of the Small 
Business Administration for comment on its impact on small business, 
and no comments were received.

Drafting Information

    The principal author of these regulations is Charles Gorham of the 
Office of Associate Chief Counsel (Income Tax and Accounting). Other 
personnel from the Treasury Department and the IRS participated in 
their development.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 602

    Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 602 are amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 amended by adding 
sectional authorities for Sec. Sec.  1.170A-15 through 1.170A-18 in 
numerical order to read in part as follows:

    Authority: 26 U.S.C. 7805 * * *
* * * * *
    Sec.  1.170A-15 also issued under 26 U.S.C. 170(a)(1).
    Sec.  1.170A-16 also issued under 26 U.S.C. 170(a)(1) and 
170(f)(11).
    Sec.  1.170A-17 also issued under 26 U.S.C. 170(a)(1) and 
170(f)(11).
    Sec.  1.170A-18 also issued under 26 U.S.C. 170(a)(1).
* * * * *


Sec. Sec.  1.170-0, 1.170-1, and 1.170-2   [Removed]

0
Par. 2. Sections 1.170-0, 1.170-1, and 1.170-2 are removed.

0
Par. 3. Section 1.170A-1 is amended by revising the third sentence of 
paragraph (a) and adding two sentences to the end of paragraph (k) to 
read as follows:


Sec.  1.170A-1   Charitable, etc., contributions and gifts; allowance 
of deduction.

    (a) * * * For rules relating to record keeping and return 
requirements in

[[Page 36422]]

support of deductions for charitable contributions (whether by an 
itemizing or nonitemizing taxpayer), see Sec. Sec.  1.170A-13, 1.170A-
14, 1.170A-15, 1.170A-16, 1.170A-17, and 1.170A-18. * * *
* * * * *
    (k) * * * The third sentence of paragraph (a) applies as provided 
in the sections referenced in that sentence.

0
Par. 4. Section 1.170A-13 is amended by revising the heading to read as 
follows:


Sec.  1.170A-13  Recordkeeping and return requirements for deductions 
for charitable contributions.

* * * * *

0
Par. 5. Section 1.170A-14 is amended by revising paragraphs (i) and (j) 
to read as follows:


Sec.  1.170A-14.  Qualified conservation contributions.

* * * * *
    (i) Substantiation requirement. If a taxpayer makes a qualified 
conservation contribution and claims a deduction, the taxpayer must 
maintain written records of the fair market value of the underlying 
property before and after the donation and the conservation purpose 
furthered by the donation, and such information shall be stated in the 
taxpayer's income tax return if required by the return or its 
instructions. See also Sec.  1.170A-13(c) (relating to substantiation 
requirements for deductions in excess of $5,000 for charitable 
contributions made on or before July 30, 2018); Sec.  1.170A-16(d) 
(relating to substantiation of charitable contributions of more than 
$5,000 made after July 30, 2018); Sec.  1.170A-17 (relating to the 
definitions of qualified appraisal and qualified appraiser for 
substantiation of contributions made on or after January 1, 2019); and 
section 6662 (relating to the imposition of an accuracy-related penalty 
on underpayments). Taxpayers may rely on the rules in Sec.  1.170A-
16(d) for contributions made after June 3, 2004, or appraisals prepared 
for returns or submissions filed after August 17, 2006. Taxpayers may 
rely on the rules in Sec.  1.170A-17 for appraisals prepared for 
returns or submissions filed after August 17, 2006.
    (j) Effective/applicability dates. Except as otherwise provided in 
Sec.  1.170A-14(g)(4)(ii) and Sec.  1.170A-14(i), this section applies 
only to contributions made on or after December 18, 1980.

0
Par. 6. Section 1.170A-15 is added to read as follows:


Sec.  1.170A-15  Substantiation requirements for charitable 
contribution of a cash, check, or other monetary gift.

    (a) In general--(1) Bank record or written communication required. 
No deduction is allowed under sections 170(a) and 170(f)(17) for a 
charitable contribution in the form of a cash, check, or other monetary 
gift, as described in paragraph (b)(1) of this section, unless the 
donor substantiates the deduction with a bank record, as described in 
paragraph (b)(2) of this section, or a written communication, as 
described in paragraph (b)(3) of this section, from the donee showing 
the name of the donee, the date of the contribution, and the amount of 
the contribution.
    (2) Additional substantiation required for contributions of $250 or 
more. No deduction is allowed under section 170(a) for any contribution 
of $250 or more unless the donor substantiates the contribution with a 
contemporaneous written acknowledgment, as described in section 
170(f)(8) and Sec.  1.170A-13(f), from the donee.
    (3) Single document may be used. The requirements of paragraphs 
(a)(1) and (2) of this section may be met by a single document that 
contains all the information required by paragraphs (a)(1) and (2) of 
this section, if the document is obtained by the donor no later than 
the date prescribed by paragraph (c) of this section.
    (b) Terms--(1) Monetary gift includes a transfer of a gift card 
redeemable for cash, and a payment made by credit card, electronic fund 
transfer (as described in section 5061(e)(2)), an online payment 
service, or payroll deduction.
    (2) Bank record includes a statement from a financial institution, 
an electronic fund transfer receipt, a canceled check, a scanned image 
of both sides of a canceled check obtained from a bank website, or a 
credit card statement.
    (3) Written communication includes email.
    (c) Deadline for receipt of substantiation. The substantiation 
described in paragraph (a) of this section must be received by the 
donor on or before the earlier of--
    (1) The date the donor files the original return for the taxable 
year in which the contribution was made; or
    (2) The due date, including any extension, for filing the donor's 
original return for that year.
    (d) Special rules--(1) Contributions made by payroll deduction. In 
the case of a charitable contribution made by payroll deduction, a 
donor is treated as meeting the requirements of section 170(f)(17) and 
paragraph (a) of this section if, no later than the date described in 
paragraph (c) of this section, the donor obtains--
    (i) A pay stub, Form W-2, ``Wage and Tax Statement,'' or other 
employer-furnished document that sets forth the amount withheld during 
the taxable year for payment to a donee; and
    (ii) A pledge card or other document prepared by or at the 
direction of the donee that shows the name of the donee.
    (2) Distributing organizations as donees. The following 
organizations are treated as donees for purposes of section 170(f)(17) 
and paragraph (a) of this section, even if the organization (pursuant 
to the donor's instructions or otherwise) distributes the amount 
received to one or more organizations described in section 170(c):
    (i) An organization described in section 170(c).
    (ii) An organization described in 5 CFR 950.105 (a Principal 
Combined Fund Organization (PCFO) for purposes of the Combined Federal 
Campaign (CFC)) and acting in that capacity. For purposes of the 
requirement for a written communication under section 170(f)(17), if 
the donee is a PCFO, the name of the local CFC campaign may be treated 
as the name of the donee organization.
    (e) Substantiation of out-of-pocket expenses. Paragraph (a)(1) of 
this section does not apply to a donor who incurs unreimbursed expenses 
of less than $250 incident to the rendition of services, within the 
meaning of Sec.  1.170A-1(g). For substantiation of unreimbursed out-
of-pocket expenses of $250 or more, see Sec.  1.170A-13(f)(10).
    (f) Charitable contributions made by partnership or S corporation. 
If a partnership or an S corporation makes a charitable contribution, 
the partnership or S corporation is treated as the donor for purposes 
of section 170(f)(17) and paragraph (a) of this section.
    (g) Transfers to certain trusts. The requirements of section 
170(f)(17) and paragraphs (a)(1) and (3) of this section do not apply 
to a transfer of a cash, check, or other monetary gift to a trust 
described in section 170(f)(2)(B); a charitable remainder annuity 
trust, as described in section 664(d)(1) and the corresponding 
regulations; or a charitable remainder unitrust, as described in 
section 664(d)(2) or (d)(3) and the corresponding regulations. The 
requirements of section 170(f)(17) and paragraphs (a)(1) and (2) of 
this section do apply, however, to a transfer to a pooled income fund, 
as defined in section 642(c)(5).

[[Page 36423]]

    (h) Effective/applicability date. This section applies to 
contributions made after July 30, 2018. Taxpayers may rely on the rules 
of this section for contributions made in taxable years beginning after 
August 17, 2006.

0
Par. 7. Section 1.170A-16 is added to read as follows:


Sec.  1.170A-16  Substantiation and reporting requirements for noncash 
charitable contributions.

    (a) Substantiation of charitable contributions of less than $250--
(1) Individuals, partnerships, and certain corporations required to 
obtain receipt. Except as provided in paragraph (a)(2) of this section, 
no deduction is allowed under section 170(a) for a noncash charitable 
contribution of less than $250 by an individual, partnership, S 
corporation, or C corporation that is a personal service corporation or 
closely held corporation unless the donor maintains for each 
contribution a receipt from the donee showing the following 
information:
    (i) The name and address of the donee;
    (ii) The date of the contribution;
    (iii) A description of the property in sufficient detail under the 
circumstances (taking into account the value of the property) for a 
person who is not generally familiar with the type of property to 
ascertain that the described property is the contributed property; and
    (iv) In the case of securities, the name of the issuer, the type of 
security, and whether the securities are publicly traded securities 
within the meaning of Sec.  1.170A-13(c)(7)(xi).
    (2) Substitution of reliable written records--(i) In general. If it 
is impracticable to obtain a receipt (for example, where a donor 
deposits property at a donee's unattended drop site), the donor may 
satisfy the recordkeeping rules of this paragraph (a) by maintaining 
reliable written records, as described in paragraphs (a)(2)(ii) and 
(iii) of this section, for the contributed property.
    (ii) Reliable written records. The reliability of written records 
is to be determined on the basis of all of the facts and circumstances 
of a particular case, including the proximity in time of the written 
record to the contribution.
    (iii) Contents of reliable written records. Reliable written 
records must include--
    (A) The information required by paragraph (a)(1) of this section;
    (B) The fair market value of the property on the date the 
contribution was made;
    (C) The method used in determining the fair market value; and
    (D) In the case of a contribution of clothing or a household item 
as defined in Sec.  1.170A-18(c), the condition of the item.
    (3) Additional substantiation rules may apply. For additional 
substantiation rules, see paragraph (f) of this section.
    (b) Substantiation of charitable contributions of $250 or more but 
not more than $500. No deduction is allowed under section 170(a) for a 
noncash charitable contribution of $250 or more but not more than $500 
unless the donor substantiates the contribution with a contemporaneous 
written acknowledgment, as described in section 170(f)(8) and Sec.  
1.170A-13(f).
    (c) Substantiation of charitable contributions of more than $500 
but not more than $5,000--(1) In general. No deduction is allowed under 
section 170(a) for a noncash charitable contribution of more than $500 
but not more than $5,000 unless the donor substantiates the 
contribution with a contemporaneous written acknowledgment, as 
described in section 170(f)(8) and Sec.  1.170A-13(f), and meets the 
applicable requirements of this section.
    (2) Individuals, partnerships, and certain corporations also 
required to file Form 8283 (Section A). No deduction is allowed under 
section 170(a) for a noncash charitable contribution of more than $500 
but not more than $5,000 by an individual, partnership, S corporation, 
or C corporation that is a personal service corporation or closely held 
corporation unless the donor completes Form 8283 (Section A), ``Noncash 
Charitable Contributions,'' as provided in paragraph (c)(3) of this 
section, or a successor form, and files it with the return on which the 
deduction is claimed.
    (3) Completion of Form 8283 (Section A). A completed Form 8283 
(Section A) includes--
    (i) The donor's name and taxpayer identification number (for 
example, a social security number or employer identification number);
    (ii) The name and address of the donee;
    (iii) The date of the contribution;
    (iv) The following information about the contributed property:
    (A) A description of the property in sufficient detail under the 
circumstances, taking into account the value of the property, for a 
person who is not generally familiar with the type of property to 
ascertain that the described property is the contributed property;
    (B) In the case of real or tangible personal property, the 
condition of the property;
    (C) In the case of securities, the name of the issuer, the type of 
security, and whether the securities are publicly traded securities 
within the meaning of Sec.  1.170A-13(c)(7)(xi);
    (D) The fair market value of the property on the date the 
contribution was made and the method used in determining the fair 
market value;
    (E) The manner of acquisition (for example, by purchase, gift, 
bequest, inheritance, or exchange), and the approximate date of 
acquisition of the property by the donor (except that in the case of a 
contribution of publicly traded securities as defined in Sec.  1.170A-
13(c)(7)(xi), a representation that the donor held the securities for 
more than one year is sufficient) or, if the property was created, 
produced, or manufactured by or for the donor, the approximate date the 
property was substantially completed;
    (F) The cost or other basis, adjusted as provided by section 1016, 
of the property (except that the cost or basis is not required for 
contributions of publicly traded securities (as defined in Sec.  
1.170A-13(c)(7)(xi)) that would have resulted in long-term capital gain 
if sold on the contribution date, unless the donor has elected to limit 
the deduction to basis under section 170(b)(1)(C)(iii));
    (G) In the case of tangible personal property, whether the donee 
has certified it for a use related to the purpose or function 
constituting the donee's basis for exemption under section 501, or in 
the case of a governmental unit, an exclusively public purpose; and
    (v) Any other information required by Form 8283 (Section A) or the 
instructions to Form 8283 (Section A).
    (4) Additional requirement for certain vehicle contributions. In 
the case of a contribution of a qualified vehicle described in section 
170(f)(12)(E) for which an acknowledgment by the donee organization is 
required under section 170(f)(12)(D), the donor must attach a copy of 
the acknowledgment to the Form 8283 (Section A) for the return on which 
the deduction is claimed.
    (5) Additional substantiation rules may apply. For additional 
substantiation rules, see paragraph (f) of this section.
    (d) Substantiation of charitable contributions of more than 
$5,000--(1) In general. Except as provided in paragraph (d)(2) of this 
section, no deduction is allowed under section 170(a) for a noncash 
charitable contribution of more than $5,000 unless the donor--

[[Page 36424]]

    (i) Substantiates the contribution with a contemporaneous written 
acknowledgment, as described in section 170(f)(8) and Sec.  1.170A-
13(f);
    (ii) Obtains a qualified appraisal, as defined in Sec.  1.170A-
17(a)(1), prepared by a qualified appraiser, as defined in Sec.  
1.170A-17(b)(1); and
    (iii) Completes Form 8283 (Section B), as provided in paragraph 
(d)(3) of this section, or a successor form, and files it with the 
return on which the deduction is claimed.
    (2) Exception for certain noncash contributions. A qualified 
appraisal is not required, and a completed Form 8283 (Section A) 
containing the information required in paragraph (c)(3) of this section 
meets the requirements of paragraph (d)(1)(iii) of this section for 
contributions of--
    (i) Publicly traded securities as defined in Sec.  1.170A-
13(c)(7)(xi);
    (ii) Property described in section 170(e)(1)(B)(iii) (certain 
intellectual property);
    (iii) A qualified vehicle described in section 170(f)(12)(A)(ii) 
for which an acknowledgment under section 170(f)(12)(B)(iii) is 
provided; and
    (iv) Property described in section 1221(a)(1) (inventory and 
property held by the donor primarily for sale to customers in the 
ordinary course of the donor's trade or business).
    (3) Completed Form 8283 (Section B). A completed Form 8283 (Section 
B) includes--
    (i) The donor's name and taxpayer identification number (for 
example, a social security number or employer identification number);
    (ii) The donee's name, address, taxpayer identification number, 
signature, the date signed by the donee, and the date the donee 
received the property;
    (iii) The appraiser's name, address, taxpayer identification 
number, appraiser declaration, as described in paragraph (d)(4) of this 
section, signature, and the date signed by the appraiser;
    (iv) The following information about the contributed property:
    (A) The fair market value on the valuation effective date, as 
defined in Sec.  1.170A-17(a)(5)(i).
    (B) A description in sufficient detail under the circumstances, 
taking into account the value of the property, for a person who is not 
generally familiar with the type of property to ascertain that the 
described property is the contributed property.
    (C) In the case of real property or tangible personal property, the 
condition of the property;
    (v) The manner of acquisition (for example, by purchase, gift, 
bequest, inheritance, or exchange), and the approximate date of 
acquisition of the property by the donor, or, if the property was 
created, produced, or manufactured by or for the donor, the approximate 
date the property was substantially completed;
    (vi) The cost or other basis of the property, adjusted as provided 
by section 1016;
    (vii) A statement explaining whether the charitable contribution 
was made by means of a bargain sale and, if so, the amount of any 
consideration received for the contribution; and
    (viii) Any other information required by Form 8283 (Section B) or 
the instructions to Form 8283 (Section B).
    (4) Appraiser declaration. The appraiser declaration referred to in 
paragraph (d)(3)(iii) of this section must include the following 
statement: ``I understand that my appraisal will be used in connection 
with a return or claim for refund. I also understand that, if there is 
a substantial or gross valuation misstatement of the value of the 
property claimed on the return or claim for refund that is based on my 
appraisal, I may be subject to a penalty under section 6695A of the 
Internal Revenue Code, as well as other applicable penalties. I affirm 
that I have not been at any time in the three-year period ending on the 
date of the appraisal barred from presenting evidence or testimony 
before the Department of the Treasury or the Internal Revenue Service 
pursuant to 31 U.S.C. 330(c).''
    (5) Donee signature--(i) Person authorized to sign. The person who 
signs Form 8283 (Section B) for the donee must be either an official 
authorized to sign the tax or information returns of the donee, or a 
person specifically authorized to sign Forms 8283 (Section B) by that 
official. In the case of a donee that is a governmental unit, the 
person who signs Form 8283 (Section B) for the donee must be an 
official of the governmental unit.
    (ii) Effect of donee signature. The signature of the donee on Form 
8283 (Section B) does not represent concurrence in the appraised value 
of the contributed property. Rather, it represents acknowledgment of 
receipt of the property described in Form 8283 (Section B) on the date 
specified in Form 8283 (Section B) and that the donee understands the 
information reporting requirements imposed by section 6050L and Sec.  
1.6050L-1.
    (iii) Certain information not required on Form 8283 (Section B) 
before donee signs. Before Form 8283 (Section B) is signed by the 
donee, Form 8283 (Section B) must be completed (as described in 
paragraph (d)(3) of this section), except that it is not required to 
contain the following:
    (A) The appraiser declaration or information about the qualified 
appraiser.
    (B) The manner or date of acquisition.
    (C) The cost or other basis of the property.
    (D) The appraised fair market value of the contributed property.
    (E) The amount claimed as a charitable contribution.
    (6) Additional substantiation rules may apply. For additional 
substantiation rules, see paragraph (f) of this section.
    (7) More than one appraiser. More than one appraiser may appraise 
the donated property. If more than one appraiser appraises the 
property, the donor does not have to use each appraiser's appraisal for 
purposes of substantiating the charitable contribution deduction under 
this paragraph (d). If the donor uses the appraisal of more than one 
appraiser, or if two or more appraisers contribute to a single 
appraisal, each appraiser shall comply with the requirements of this 
paragraph (d) and the requirements in Sec.  1.170A-17, including 
signing the qualified appraisal and appraisal summary.
    (e) Substantiation of noncash charitable contributions of more than 
$500,000--(1) In general. Except as provided in paragraph (e)(2) of 
this section, no deduction is allowed under section 170(a) for a 
noncash charitable contribution of more than $500,000 unless the 
donor--
    (i) Substantiates the contribution with a contemporaneous written 
acknowledgment, as described in section 170(f)(8) and Sec.  1.170A-
13(f);
    (ii) Obtains a qualified appraisal, as defined in Sec.  1.170A-
17(a)(1), prepared by a qualified appraiser, as defined in Sec.  
1.170A-17(b)(1);
    (iii) Completes, as described in paragraph (d)(3) of this section, 
Form 8283 (Section B) and files it with the return on which the 
deduction is claimed; and
    (iv) Attaches the qualified appraisal of the property to the return 
on which the deduction is claimed.
    (2) Exception for certain noncash contributions. For contributions 
of property described in paragraph (d)(2) of this section, a qualified 
appraisal is not required, and a completed Form 8283 (Section A), 
containing the information required in paragraph (c)(3) of this 
section, meets the requirements of paragraph (e)(1)(iii) of this 
section.
    (3) Additional substantiation rules may apply. For additional

[[Page 36425]]

substantiation rules, see paragraph (f) of this section.
    (f) Additional substantiation rules--(1) Form 8283 (Section B) 
furnished by donor to donee. A donor who presents a Form 8283 (Section 
B) to a donee for signature must furnish to the donee a copy of the 
Form 8283 (Section B).
    (2) Number of Forms 8283 (Section A or Section B)--(i) In general. 
For each item of contributed property for which a Form 8283 (Section A 
or Section B) is required under paragraphs (c), (d), or (e) of this 
section, a donor must attach a separate Form 8283 (Section A or Section 
B) to the return on which the deduction for the item is claimed.
    (ii) Exception for similar items. The donor may attach a single 
Form 8283 (Section A or Section B) for all similar items of property, 
as defined in Sec.  1.170A-13(c)(7)(iii), contributed to the same donee 
during the donor's taxable year, if the donor includes on Form 8283 
(Section A or Section B) the information required by paragraph (c)(3) 
or (d)(3) of this section for each item of property.
    (3) Substantiation requirements for carryovers of noncash 
contribution deductions. The rules in paragraphs (c), (d), and (e) of 
this section (regarding substantiation that must be submitted with a 
return) also apply to the return for any carryover year under section 
170(d).
    (4) Partners and S corporation shareholders--(i) Form 8283 (Section 
A or Section B) must be provided to partners and S corporation 
shareholders. If the donor is a partnership or S corporation, the donor 
must provide a copy of the completed Form 8283 (Section A or Section B) 
to every partner or shareholder who receives an allocation of a 
charitable contribution deduction under section 170 for the property 
described in Form 8283 (Section A or Section B). Similarly, a recipient 
partner or shareholder that is a partnership or S corporation must 
provide a copy of the completed Form 8283 (Section A or Section B) to 
each of its partners or shareholders who receives an allocation of a 
charitable contribution deduction under section 170 for the property 
described in Form 8283 (Section A or Section B).
    (ii) Partners and S corporation shareholders must attach Form 8283 
(Section A or Section B) to return. A partner of a partnership or 
shareholder of an S corporation who receives an allocation of a 
charitable contribution deduction under section 170 for property to 
which paragraph (c), (d), or (e) of this section applies must attach a 
copy of the partnership's or S corporation's completed Form 8283 
(Section A or Section B) to the return on which the deduction is 
claimed.
    (5) Determination of deduction amount for purposes of 
substantiation rules--(i) In general. In determining whether the amount 
of a donor's deduction exceeds the amounts set forth in section 
170(f)(11)(B) (noncash contributions exceeding $500), 170(f)(11)(C) 
(noncash contributions exceeding $5,000), or 170(f)(11)(D) (noncash 
contributions exceeding $500,000), the rules of paragraphs (f)(5)(ii) 
and (iii) of this section apply.
    (ii) Similar items of property must be aggregated. Under section 
170(f)(11)(F), the donor must aggregate the amount claimed as a 
deduction for all similar items of property, as defined in Sec.  
1.170A-13(c)(7)(iii), contributed during the taxable year. For rules 
regarding the number of qualified appraisals and Forms 8283 (Section A 
or Section B) required if similar items of property are contributed, 
see Sec.  1.170A-13(c)(3)(iv)(A) and (4)(iv)(B).
    (iii) For contributions of certain inventory and scientific 
property, excess of amount claimed over cost of goods sold taken into 
account--(A) In general. In determining the amount of a donor's 
contribution of property to which section 170(e)(3) (relating to 
contributions of inventory and other property) or (e)(4) (relating to 
contributions of scientific property used for research) applies, the 
donor must take into account only the excess of the amount claimed as a 
deduction over the amount that would have been treated as the cost of 
goods sold if the donor had sold the contributed property to the donee.
    (B) Example. The following example illustrates the rule of this 
paragraph (f)(5)(iii):

    Example.  X Corporation makes a contribution of inventory 
described in section 1221(a)(2). The contribution, described in 
section 170(e)(3), is for the care of the needy. The cost of the 
property to X Corporation is $5,000 and the fair market value of the 
property at the time of the contribution is $11,000. Pursuant to 
section 170(e)(3)(B), X Corporation claims a charitable contribution 
deduction of $8,000 ($5,000 + \1/2\ x ($11,000 - 5,000) = $8,000). 
The amount taken into account for purposes of determining the $5,000 
threshold of paragraph (d) of this section is $3,000 ($8,000-
$5,000).

    (g) Effective/applicability date. This section applies to 
contributions made after July 30, 2018. Taxpayers may rely on the rules 
of this section for contributions made after June 3, 2004, or 
appraisals prepared for returns or submissions filed after August 17, 
2006.

0
Par. 8. Section 1.170A-17 is added to read as follows:


Sec.  1.170A-17  Qualified appraisal and qualified appraiser.

    (a) Qualified appraisal--(1) Definition. For purposes of section 
170(f)(11) and Sec.  1.170A-16(d)(1)(ii) and (e)(1)(ii), the term 
qualified appraisal means an appraisal document that is prepared by a 
qualified appraiser (as defined in paragraph (b)(1) of this section) in 
accordance with generally accepted appraisal standards (as defined in 
paragraph (a)(2) of this section) and otherwise complies with the 
requirements of this paragraph (a).
    (2) Generally accepted appraisal standards defined. For purposes of 
paragraph (a)(1) of this section, generally accepted appraisal 
standards means the substance and principles of the Uniform Standards 
of Professional Appraisal Practice, as developed by the Appraisal 
Standards Board of the Appraisal Foundation.
    (3) Contents of qualified appraisal. A qualified appraisal must 
include--
    (i) The following information about the contributed property:
    (A) A description in sufficient detail under the circumstances, 
taking into account the value of the property, for a person who is not 
generally familiar with the type of property to ascertain that the 
appraised property is the contributed property.
    (B) In the case of real property or tangible personal property, the 
condition of the property.
    (C) The valuation effective date, as defined in paragraph (a)(5)(i) 
of this section.
    (D) The fair market value, within the meaning of Sec.  1.170A-
1(c)(2), of the contributed property on the valuation effective date;
    (ii) The terms of any agreement or understanding by or on behalf of 
the donor and donee that relates to the use, sale, or other disposition 
of the contributed property, including, for example, the terms of any 
agreement or understanding that--
    (A) Restricts temporarily or permanently a donee's right to use or 
dispose of the contributed property;
    (B) Reserves to, or confers upon, anyone, other than a donee or an 
organization participating with a donee in cooperative fundraising, any 
right to the income from the contributed property or to the possession 
of the property, including the right to vote contributed securities, to 
acquire the property by purchase or otherwise, or to designate the 
person having income, possession, or right to acquire; or
    (C) Earmarks contributed property for a particular use;

[[Page 36426]]

    (iii) The date, or expected date, of the contribution to the donee;
    (iv) The following information about the appraiser:
    (A) Name, address, and taxpayer identification number.
    (B) Qualifications to value the type of property being valued, 
including the appraiser's education and experience.
    (C) If the appraiser is acting in his or her capacity as a partner 
in a partnership, an employee of any person, whether an individual, 
corporation, or partnership, or an independent contractor engaged by a 
person other than the donor, the name, address, and taxpayer 
identification number of the partnership or the person who employs or 
engages the qualified appraiser;
    (v) The signature of the appraiser and the date signed by the 
appraiser (appraisal report date);
    (vi) The following declaration by the appraiser: ``I understand 
that my appraisal will be used in connection with a return or claim for 
refund. I also understand that, if there is a substantial or gross 
valuation misstatement of the value of the property claimed on the 
return or claim for refund that is based on my appraisal, I may be 
subject to a penalty under section 6695A of the Internal Revenue Code, 
as well as other applicable penalties. I affirm that I have not been at 
any time in the three-year period ending on the date of the appraisal 
barred from presenting evidence or testimony before the Department of 
the Treasury or the Internal Revenue Service pursuant to 31 U.S.C. 
330(c)'';
    (vii) A statement that the appraisal was prepared for income tax 
purposes;
    (viii) The method of valuation used to determine the fair market 
value, such as the income approach, the market-data approach, or the 
replacement-cost-less-depreciation approach; and
    (ix) The specific basis for the valuation, such as specific 
comparable sales transactions or statistical sampling, including a 
justification for using sampling and an explanation of the sampling 
procedure employed.
    (4) Timely appraisal report. A qualified appraisal must be signed 
and dated by the qualified appraiser no earlier than 60 days before the 
date of the contribution and no later than--
    (i) The due date, including extensions, of the return on which the 
deduction for the contribution is first claimed;
    (ii) In the case of a donor that is a partnership or S corporation, 
the due date, including extensions, of the return on which the 
deduction for the contribution is first reported; or
    (iii) In the case of a deduction first claimed on an amended 
return, the date on which the amended return is filed.
    (5) Valuation effective date--(i) Definition. The valuation 
effective date is the date to which the value opinion applies.
    (ii) Timely valuation effective date. For an appraisal report dated 
before the date of the contribution, as described in Sec.  1.170A-1(b), 
the valuation effective date must be no earlier than 60 days before the 
date of the contribution and no later than the date of the 
contribution. For an appraisal report dated on or after the date of the 
contribution, the valuation effective date must be the date of the 
contribution.
    (6) Exclusion for donor knowledge of falsity. An appraisal is not a 
qualified appraisal for a particular contribution, even if the 
requirements of this paragraph (a) are met, if the donor either failed 
to disclose or misrepresented facts, and a reasonable person would 
expect that this failure or misrepresentation would cause the appraiser 
to misstate the value of the contributed property.
    (7) Number of appraisals required. A donor must obtain a separate 
qualified appraisal for each item of property for which an appraisal is 
required under section 170(f)(11)(C) and (D) and paragraph (d) or (e) 
of Sec.  1.170A-16 and that is not included in a group of similar items 
of property, as defined in Sec.  1.170A-13(c)(7)(iii). For rules 
regarding the number of appraisals required if similar items of 
property are contributed, see section 170(f)(11)(F) and Sec.  1.170A-
13(c)(3)(iv)(A).
    (8) Time of receipt of qualified appraisal. The qualified appraisal 
must be received by the donor before the due date, including 
extensions, of the return on which a deduction is first claimed, or 
reported in the case of a donor that is a partnership or S corporation, 
under section 170 with respect to the donated property, or, in the case 
of a deduction first claimed, or reported, on an amended return, the 
date on which the return is filed.
    (9) Prohibited appraisal fees. The fee for a qualified appraisal 
cannot be based to any extent on the appraised value of the property. 
For example, a fee for an appraisal will be treated as based on the 
appraised value of the property if any part of the fee depends on the 
amount of the appraised value that is allowed by the Internal Revenue 
Service after an examination.
    (10) Retention of qualified appraisal. The donor must retain the 
qualified appraisal for so long as it may be relevant in the 
administration of any internal revenue law.
    (11) Effect of appraisal disregarded pursuant to 31 U.S.C. 330(c). 
If an appraiser has been prohibited from practicing before the Internal 
Revenue Service by the Secretary under 31 U.S.C. 330(c) at any time 
during the three-year period ending on the date the appraisal is signed 
by the appraiser, any appraisal prepared by the appraiser will be 
disregarded as to value, but could constitute a qualified appraisal if 
the requirements of this section are otherwise satisfied, and the donor 
had no knowledge that the signature, date, or declaration was false 
when the appraisal and Form 8283 (Section B) were signed by the 
appraiser.
    (12) Partial interest. If the contributed property is a partial 
interest, the appraisal must be of the partial interest.
    (b) Qualified appraiser--(1) Definition. For purposes of section 
170(f)(11) and Sec.  1.170A-16(d)(1)(ii) and (e)(1)(ii), the term 
qualified appraiser means an individual with verifiable education and 
experience in valuing the type of property for which the appraisal is 
performed, as described in paragraphs (b)(2) through (4) of this 
section.
    (2) Education and experience in valuing the type of property--(i) 
In general. An individual is treated as having education and experience 
in valuing the type of property within the meaning of paragraph (b)(1) 
of this section if, as of the date the individual signs the appraisal, 
the individual has--
    (A) Successfully completed (for example, received a passing grade 
on a final examination) professional or college-level coursework, as 
described in paragraph (b)(2)(ii) of this section, in valuing the type 
of property, as described in paragraph (b)(3) of this section, and has 
two or more years of experience in valuing the type of property, as 
described in paragraph (b)(3) of this section; or
    (B) Earned a recognized appraiser designation, as described in 
paragraph (b)(2)(iii) of this section, for the type of property, as 
described in paragraph (b)(3) of this section.
    (ii) Coursework must be obtained from an educational organization, 
generally recognized professional trade or appraiser organization, or 
employer educational program. For purposes of paragraph (b)(2)(i)(A) of 
this section, the coursework must be obtained from--
    (A) A professional or college-level educational organization 
described in section 170(b)(1)(A)(ii);
    (B) A generally recognized professional trade or appraiser 
organization that regularly offers

[[Page 36427]]

educational programs in valuing the type of property; or
    (C) An employer as part of an employee apprenticeship or 
educational program substantially similar to the educational programs 
described in paragraphs (b)(2)(ii)(A) and (B) of this section.
    (iii) Recognized appraiser designation defined. A recognized 
appraiser designation means a designation awarded by a generally 
recognized professional appraiser organization on the basis of 
demonstrated competency.
    (3) Type of property defined--(i) In general. The type of property 
means the category of property customary in the appraisal field for an 
appraiser to value.
    (ii) Examples. The following examples illustrate the rule of 
paragraphs (b)(2)(i) and (b)(3)(i) of this section:

    Example (1).  Coursework in valuing type of property. There are 
very few professional-level courses offered in widget appraising, 
and it is customary in the appraisal field for personal property 
appraisers to appraise widgets. Appraiser A has successfully 
completed professional-level coursework in valuing personal property 
generally but has completed no coursework in valuing widgets. The 
coursework completed by Appraiser A is for the type of property 
under paragraphs (b)(2)(i) and (b)(3)(i) of this section.
    Example (2).  Experience in valuing type of property. It is 
customary for professional antique appraisers to appraise antique 
widgets. Appraiser B has 2 years of experience in valuing antiques 
generally and is asked to appraise an antique widget. Appraiser B 
has obtained experience in valuing the type of property under 
paragraphs (b)(2)(i) and (b)(3)(i) of this section.
    Example (3).  No experience in valuing type of property. It is 
not customary for professional antique appraisers to appraise new 
widgets. Appraiser C has experience in appraising antiques generally 
but no experience in appraising new widgets. Appraiser C is asked to 
appraise a new widget. Appraiser C does not have experience in 
valuing the type of property under paragraphs (b)(2)(i) and 
(b)(3)(i) of this section.

    (4) Verifiable. For purposes of paragraph (b)(1) of this section, 
education and experience in valuing the type of property are verifiable 
if the appraiser specifies in the appraisal the appraiser's education 
and experience in valuing the type of property, as described in 
paragraphs (b)(2) and (3) of this section, and the appraiser makes a 
declaration in the appraisal that, because of the appraiser's education 
and experience, the appraiser is qualified to make appraisals of the 
type of property being valued.
    (5) Individuals who are not qualified appraisers. The following 
individuals are not qualified appraisers for the appraised property:
    (i) An individual who receives a fee prohibited by paragraph (a)(9) 
of this section for the appraisal of the appraised property.
    (ii) The donor of the property.
    (iii) A party to the transaction in which the donor acquired the 
property (for example, the individual who sold, exchanged, or gave the 
property to the donor, or any individual who acted as an agent for the 
transferor or for the donor for the sale, exchange, or gift), unless 
the property is contributed within 2 months of the date of acquisition 
and its appraised value does not exceed its acquisition price.
    (iv) The donee of the property.
    (v) Any individual who is either--
    (A) Related, within the meaning of section 267(b), to, or an 
employee of, an individual described in paragraph (b)(5)(ii), (iii), or 
(iv) of this section;
    (B) Married to an individual described in paragraph (b)(5)(v)(A) of 
this section; or
    (C) An independent contractor who is regularly used as an appraiser 
by any of the individuals described in paragraph (b)(5)(ii), (iii), or 
(iv) of this section, and who does not perform a majority of his or her 
appraisals for others during the taxable year.
    (vi) An individual who is prohibited from practicing before the 
Internal Revenue Service by the Secretary under 31 U.S.C. 330(c) at any 
time during the three-year period ending on the date the appraisal is 
signed by the individual.
    (c) Effective/applicability date. This section applies to 
contributions made on or after January 1, 2019. Taxpayers may rely on 
the rules of this section for appraisals prepared for returns or 
submissions filed after August 17, 2006.

0
Par. 9. Section 1.170A-18 is added to read as follows:


Sec.  1.170A-18  Contributions of clothing and household items.

    (a) In general. Except as provided in paragraph (b) of this 
section, no deduction is allowed under section 170(a) for a 
contribution of clothing or a household item (as described in paragraph 
(c) of this section) unless--
    (1) The item is in good used condition or better at the time of the 
contribution; and
    (2) The donor meets the substantiation requirements of Sec.  
1.170A-16.
    (b) Certain contributions of clothing or household items with 
claimed value of more than $500. The rule described in paragraph (a)(1) 
of this section does not apply to a contribution of a single item of 
clothing or a household item for which a deduction of more than $500 is 
claimed, if the donor submits with the return on which the deduction is 
claimed a qualified appraisal, as defined in Sec.  1.170A-17(a)(1), of 
the property prepared by a qualified appraiser, as defined in Sec.  
1.170A-17(b)(1), and a completed Form 8283 (Section B), ``Noncash 
Charitable Contributions,'' as described in Sec.  1.170A-16(d)(3).
    (c) Definition of household items. For purposes of section 
170(f)(16) and this section, the term household items includes 
furniture, furnishings, electronics, appliances, linens, and other 
similar items. Food, paintings, antiques, and other objects of art, 
jewelry, gems, and collections are not household items.
    (d) Effective/applicability date. This section applies to 
contributions made after July 30, 2018. Taxpayers may rely on the rules 
of this section for contributions made after August 17, 2006.

0
Par. 10. Sec.  1.664-1 is amended by revising paragraph (a)(7)(i)(b) 
and adding a sentence to the end of paragraph (f)(1) to read as 
follows:


Sec.  1.664-1.  Charitable remainder trusts.

    (a) * * *
    (7) * * *
    (i) * * *
    (b) Determined by a current qualified appraisal from a qualified 
appraiser, as those terms are defined in--
    (1) Section 1.170A-13(c)(3) and 1.170A-13(c)(5), respectively, for 
appraisals prepared for returns or submissions filed on or before 
August 17, 2006;
    (2) Section 3 of Notice 2006-96, 2006-2 CB 902, for appraisals 
prepared for returns or submissions filed after August 17, 2006, if the 
donations are made before January 1, 2019; or
    (3) Section 1.170A-17(a) and 1.170A-17(b), respectively, for 
appraisals prepared for returns or submissions for donations made on or 
after January 1, 2019.
* * * * *
    (f) * * *
    (1) * * * The provisions of paragraph Sec.  1.664-1(a)(7)(i)(b) 
apply as provided in that paragraph.
* * * * *

0
Par. 10. Sec.  1.6050L-1 is amended by:
0
1. Revising the first two sentences of paragraph (a)(2)(i).
0
2. Revising paragraphs (c)(4)(i) introductory text and (d)(2).
0
3. Revising the first sentences of paragraphs (e) and (f)(2)(ii).
0
4. Adding paragraph (h).
    The revisions and addition read as follows:

[[Page 36428]]

Sec.  1.6050L-1.  Information return by donees relating to certain 
dispositions of donated property.

    (a) * * *
    (2) * * *
    (i) In general. Paragraph (a)(1) of this section shall not apply 
with respect to an item of charitable deduction property disposed of by 
sale if the Form 8283 appraisal summary (as described in Sec.  1.170A-
13(c)(4) for contributions made on or before July 30, 2018 and Sec.  
1.170A-16(d)(3) for contributions made after July 30, 2018), or a 
successor form, signed by the donee with respect to the item contains, 
at the time of the donee's signature, a statement signed by the donor 
that the appraised value of the item does not exceed $500. In the case 
of a Form 8283 appraisal summary that describes more than one item, 
this exception shall apply only with respect to an item clearly 
identified as having an appraised value of $500 or less. * * *
* * * * *
    (c) * * *
    (4) * * *
    (i) Shall provide its name, address, and employer identification 
number and a copy of the Form 8283 appraisal summary (as described in 
Sec.  1.170A-13(c)(4) for contributions made on or before July 30, 2018 
and Sec.  1.170A-16(d)(3) for contributions made after July 30, 2018) 
relating to the transferred property to the successor donee on or 
before the 15th day after the latest of--
* * * * *
    (d) * * *
    (2) Retention of Form 8283 appraisal summary. Every donee shall 
retain the Form 8283 appraisal summary (as described in Sec.  1.170A-
13(c)(4) for contributions made on or before July 30, 2018 and Sec.  
1.170A-16(d)(3) for contributions made after July 30, 2018) in the 
donee's records for so long as it may be relevant in the administration 
of any internal revenue law.
* * * * *
    (e) Charitable deduction property. For purposes of this section, 
the term charitable deduction property means any property (other than 
money and publicly traded securities to which Sec.  1.170A-
13(c)(7)(xi)(B) does not apply) contributed after December 31, 1984, 
with respect to which the donee signs (or is presented with for 
signature in cases described in Sec.  1.170A-13(c)(4)(iv)(C)(2)) a Form 
8283 appraisal summary (as described in Sec.  1.170A-13(c)(4) for 
contributions made on or before July 30, 2018 and Sec.  1.170A-16(d)(3) 
for contributions made after July 30, 2018). * * *
* * * * *
    (f) * * *
    (2) * * *
    (ii) Exception. Notwithstanding paragraph (f)(2)(i) of this 
section, in the case of a donee who, on the date of receipt of the 
transferred property, had no reason to believe that the substantiation 
requirements of Sec.  1.170A-13(c) or Sec.  1.170A-16(d) apply with 
respect to the property, the donee information return is not required 
to be filed until the 60th day after the date on which such donee has 
reason to believe that the substantiation requirements of Sec.  1.170A-
13(c) or Sec.  1.170A-16(d) apply with respect to the property. * * *
* * * * *
    (h) Effective/applicability dates. The first two sentences of 
paragraph (a)(2)(i), paragraphs (c)(4)(i) and (d)(2), and the first 
sentences of paragraphs (e) and (f)(2)(ii) apply to contributions made 
after July 30, 2018.

PART 602--OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT

0
Par. 11. The authority citation for part 602 continues to read as 
follows:

    Authority:  26 U.S.C. 7805.

0
Par. 12. In Sec.  602.101, paragraph (b) is amended by adding in 
numerical order entries for 1.170A-15 through 1.170A-18 to read as 
follows:


Sec.  602.101 OMB  Control numbers.

* * * * *
    (b) * * *

------------------------------------------------------------------------
                                                            Current OMB
   CFR part or section where identified and described       control No.
------------------------------------------------------------------------
1.170A-15...............................................       1545-1953
1.170A-16...............................................       1545-1953
1.170A-17...............................................       1545-1953
1.170A-18...............................................       1545-1953
------------------------------------------------------------------------


Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
    Approved: April 23, 2018.
David J. Kautter,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2018-15734 Filed 7-27-18; 8:45 am]
 BILLING CODE 4830-01-P