TaxNewsFlash-Exempt Organizations

October 3, 2008
No. 2008-94

PRINTABLE VERSION

IRS Guidance on Charitable Contributions of Inventory Property; Seeks Comments

The IRS today released an advance copy of Notice 2008-90 concerning determinations of charitable contributions of inventory property.

Notice 2008-90 provides that for a particular qualified contribution of inventory property under section 170(e)(3) that otherwise satisfies the requirements of section 170 (and regulations), the IRS will not challenge a taxpayer’s computation of the deductible amount and the required adjustment to cost of goods sold under either:

Section 170(e)(3) and Reg. section 1.170A-4A(c), or
Section 170(e)(1) and Reg. section 1.170A-1(c)

Today’s notice states taxpayers may rely on this notice unless and until further guidance is issued.

For an electronic version of the notice: Notice 2008-90

Comments Requested

The IRS and Treasury Department are examining the computation of the deductible amount and adjustment to cost of goods sold for charitable contributions of inventory property that constitute qualified contributions. As noted in today’s notice, some taxpayers making qualified contributions may, because of the income limitation under section 170(b)(2), prefer to apply the provisions of section 170(e)(1) and Reg. section 1.170A-1(c) rather than the provisions of sections 170(e)(3) and Reg. section 1.170A-4A(c).

The IRS and Treasury Department have requested comments concerning the computation of the deductible amount and the required adjustment to cost of goods sold for charitable contributions of inventory property under section 170(e)(3) as well as any other issues related to inventory contributions that ought to be addressed in future guidance. Comments are due by January 26, 2009.

Notice 2008-90 will appear in Internal Revenue Bulletin 2008-43, dated October 27, 2008.

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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