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Abstract: 

A number of important considerations arise when an individual seeks to transfer an interest in a closely held business to an IRC §501(c)(3) organization. These issues include the tax benefit of any charitable contribution deduction arising from the transfer, whether the organization can (or should) accept the interest, substantiation and reporting requirements, and post-gift tax reporting and compliance. For the reasons discussed in this article, these considerations are particularly important if a donor seeks to contribute the business interest to a private foundation. However, even if the donor transfers the interest to a public charity, care should be exercised by both the donor and the recipient organization.

Keywords: Gifts of Business Interest; Excess Business Holdings; Unrelated Business Taxable Income; IRC §751 “hot assets”

Affiliations:  1: Strasburger & Price, LLP; 2: Strasburger & Price, LLP.