Better Deductions for S Corporation Donations
by Stephen J. Small, Esq.   10.21.08


MUCH BETTER INCOME TAX DEDUCTION RULES FOR S CORPORATIONS THAT DONATE CONSERVATION EASEMENTS
By  Stephen J. Small, Esq.
10/14/2008

A minor provision included in the huge “bailout” bill that became law early this month could result in more important conservation easement donations this year and next year.  Most landowners will not be impacted by this provision at all, but for S corporation landowners this is very good news.

BACKGROUND
    The provision and the tax rules are technical but very important.  Historically, the tax rule has been that when an S corporation made a charitable contribution, the contribution flowed through to the shareholders of the S corporation, but only to the extent they had “basis” in their S corporation stock.  “Basis” is really a tax concept; often it means the same thing as “cost,” but sometimes “cost” and “basis” are different.  Let’s take a simple example.




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