(a) In determining the amount of taxable gifts for the "calendar
period" (as defined in Sec. 25.2502-1(c)(1)) there may be deducted, in
the case of a donor who was a citizen or resident of the United States
at the time the gifts were made, all gifts included in the "total
amount of gifts" made by the donor during the calendar period (see
section 2503 and the regulations thereunder) and made to or for the use
of:
(1) The United States, any State, Territory, or any political
subdivision thereof, or the District of Columbia, for exclusively public
purposes.
(2) Any corporation, trust, community chest, fund, or foundation
organized and operated exclusively for religious charitable, scientific,
literary, or educational purposes, including the encouragement of art
and the prevention of cruelty to children or animals, if no part of the
net earnings of the organization inures to the benefit of any private
shareholder or individual, if it is not disqualified for tax exemption
under section 501(c)(3) by reason of attempting to influence
legislation, and if, in the case of gifts made after December 31, 1969,
it does not participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of or in
opposition to any candidate for public office.
(3) A fraternal society, order, or association, operating under the
lodge system, provided the gifts are to be used by the society, order or
association exclusively for one or more of the purposes set forth in
subparagraph (2) of this paragraph.
(4) Any post or organization of war veterans or auxiliary unit or
society thereof, if organized in the United
States or any of its possessions, and if no part of its net earnings
inures to the benefit of any private shareholder or individual.
The deduction is not limited to gifts for use within the United States,
or to gifts to or for the use of domestic corporations, trusts,
community chests, funds, or foundations, or fraternal societies, orders,
or associations operating under the lodge system. An organization will
not be considered to meet the requirements of subparagraph (2) of this
paragraph, or of paragraph (b) (2) or (3) of this section, if such
organization engages in any activity which would cause it to be
classified as an "action" organization under paragraph (c)(3) of
Sec. 1.501(c)(3)-1 of this chapter (Income Tax Regulations). For the
deductions for charitable and similar gifts made by a nonresident who
was not a citizen of the United States at the time the gifts were made,
see Sec. 25.2522(b)-1. See Secs. 25.2522(c)-1 and 25.2522(c)-2 for rules
relating to the disallowance of deductions to trusts and organizations
which engage in certain prohibited transactions or whose governing
instruments do not contain certain specified requirements.
(b) The deduction under section 2522 is not allowed for a transfer
to a corporation, trust, community chest, fund, or foundation unless the
organization or trust meets the following four tests:
(1) It must be organized and operated exclusively for one or more of
the specified purposes.
(2) It must not be disqualified for tax exemption under section
501(c)(3) by reason of attempting to influence legislation.
(3) In the case of gifts made after December 31, 1969, it must not
participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of any
candidate for public office.
(4) Its net earnings must not inure in whole or in part to the
benefit of private shareholders or individuals other than as legitimate
objects of the exempt purposes.
For further limitations see Sec. 25.2522(c)-1, relating to gifts to
trusts and organizations which have engaged in a prohibited transaction
described in section 681(b)(2) or section 503(c).
(c) In order to prove the right to the charitable, etc., deduction
provided by section 2522 the donor must submit such data as may be
requested by the Internal Revenue Service. As to the extent the
deductions provided by this section are allowable, see section 2524.
[Aug. 31, 1990]
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