January/February 2019 | Thomson Reuters Taxation of Exempts

International Charitable Giving with Dual Qualified Entities

In January and February, 2019, Chris Moran published "International Charitable Giving with Dual Qualified Entities" in the Thomson Reuters Taxation of Exempts. Here is an excerpt:

Establishing a ‘dual qualified entity provides an avenue for charitable tax relief for U.S. citizens and resident aliens receiving income from other countries, and facilitates grantmaking by private foundations and donor advised funds. Pursuant to Section 170(c)(2)(A), only domestic charitable organizations are eligible to receive income tax-deductible contributions from individual taxpayers. The domestic organization requirement was first imposed in 1938 and followed the approach to corporate charitable income tax deductions, which was introduced in 1936. The territorial approach is not unique to the U.S. For example, under U.K. law, no income tax or capital gains relief is permitted for gifts to charities outside of the European Union. The stated rationale for territoriality is that the tax revenue the government foregoes by permitting a charitable deduction will be used by domestic charities and thus relieve the government of obligations and programs which would otherwise require expenditures from the public fisc, whereas the government derives no such benefit from gifts to foreign institutions. There are, however, options for international charitable giving, as discussed below.