IRC 170 Charitable Contribution Deduction: Substantiation, AGI Limitations, Qualified Appraisal, Conservation Easement, and Five-Year Carryover

1. What Qualifies as a Charitable Contribution Under IRC 170

IRC 170(a)(1) allows a deduction for any charitable contribution made during the taxable year, subject to the limitations and conditions set forth throughout IRC 170. The threshold question is whether a payment or transfer constitutes a "charitable contribution" as that term is defined in IRC 170(c).

A charitable contribution is a transfer of money or property to a qualifying organization (described in IRC 170(c)) made with donative intent, with no expectation of a reciprocal benefit of substantial economic value. This "donative intent" requirement means that payments made in exchange for goods, services, or other benefits are not fully deductible. The deductible amount is limited to the excess of the payment over the fair market value of benefits received (the "quid pro quo" rule, codified at IRC 170 and elaborated in Treas. Reg. 1.170A-1(h)).

The contribution must be made to the qualifying organization, not merely for its benefit. Contributions to individuals, regardless of need, are never deductible. The transfer must be complete and unconditional: a pledge to pay a future gift is not deductible in the year of the pledge; deductibility occurs in the year of actual payment or delivery of property.

Cash and Non-Cash Contributions

Cash contributions include checks, electronic funds transfers, credit card payments, and payroll deduction contributions. The year of deductibility for a check is the year the check is mailed or delivered (constructive delivery), not the year it clears the bank, provided the check is honored in due course. For credit card contributions, the year of deductibility is the year the charge is made, not the year the credit card bill is paid.

Non-cash contributions include tangible personal property, real property, securities, and intangible property. The deductible amount for non-cash contributions is governed by the fair market value rules and the reduction rules under IRC 170(e) (discussed in Section 7).

Contributions "For the Use Of" Versus "To" a Qualifying Organization

IRC 170(c) permits deductions for contributions "to or for the use of" qualifying organizations. "For the use of" has a narrower meaning than "to": it refers to contributions held in trust or in a legally enforceable fiduciary relationship for the qualifying organization, not merely contributions intended to benefit the organization indirectly. This distinction matters because the AGI limitations differ: contributions "to" a public charity may qualify for the 60% limit, while contributions "for the use of" a public charity are limited to 30% of AGI. See Treas. Reg. 1.170A-8(a)(2).

2. Qualified Organizations: Who May Receive Deductible Contributions

IRC 170(c) identifies five categories of qualifying donees:

1. Governmental entities: The United States, any state, any possession of the United States, any political subdivision of a state or possession, or the District of Columbia, but only if the contribution is made exclusively for public purposes. IRC 170(c)(1).
2. Public charities and private foundations: Corporations, trusts, community chests, funds, or foundations organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition (if no facilities or equipment are provided), or for the prevention of cruelty to children or animals. The organization must be domestic, no part of its net earnings may inure to a private individual, it must not devote a substantial part of its activities to lobbying, and it must not participate in political campaigns. IRC 170(c)(2).
3. Veterans organizations: Posts or organizations of war veterans, or auxiliaries, organized in the United States or any of its possessions if no part of net earnings inures to private individuals. IRC 170(c)(3).
4. Domestic fraternal societies: Operating under the lodge system, but only if contributions are used exclusively for religious, charitable, scientific, literary, or educational purposes. IRC 170(c)(4).
5. Cemetery companies: Owned and operated exclusively for the benefit of their members. IRC 170(c)(5).

Public Charity vs. Private Foundation: Why It Matters

An organization described in IRC 170(b)(1)(A)(i) through (vi) is a "public charity" for purposes of the higher AGI limitations (up to 60% of AGI for cash contributions). Organizations that do not qualify as public charities are classified as "private foundations" under IRC 509(a). Contributions to private foundations are subject to lower AGI limits (generally 30% for cash and 20% for capital gain property) and more restrictive deductibility rules.

The IRS Tax Exempt Organization Search (TEOS) tool at IRS.gov allows practitioners to verify an organization's public charity classification, ruling date, and exempt status. Contribution deductions are disallowed if the organization did not have qualifying status at the time of the contribution, even if the organization later obtains or re-obtains qualifying status.

Donor-Advised Funds

A donor-advised fund (DAF) is a fund or account owned and controlled by a sponsoring organization (a public charity) to which a donor contributes and over which the donor retains advisory privileges with respect to the distribution of amounts. Contributions to a DAF are treated as contributions to the sponsoring public charity, not to the ultimate recipient of grants from the DAF. As a result, the deduction is generally available in the year of contribution to the DAF, even though grants to specific charities may be made in future years.

3. The Three AGI Limitation Tiers: 60%, 30%, and 20% Buckets

IRC 170(b) imposes annual deduction ceilings expressed as a percentage of the taxpayer's contribution base (which for most individual taxpayers equals AGI, computed without regard to any net operating loss carryback). The three primary tiers are:

Tier 1: 60% Limit (Cash to Public Charities)

Cash contributions to organizations described in IRC 170(b)(1)(A) (public charities, including churches, schools, hospitals, medical research organizations, and organizations meeting the public support test) are deductible up to 60% of the taxpayer's contribution base. This 60% limit was enacted by the Tax Cuts and Jobs Act of 2017, increasing the prior 50% limit for cash contributions only. Contributions of non-cash property to public charities generally remain subject to the 50% limit, not the 60% limit, unless otherwise specified. See IRC 170(b)(1)(B)(ii). Verify the current applicable percentage at IRS.gov, as Congress has temporarily modified these rates in prior years.

Tier 2: 30% Limit (Capital Gain Property to Public Charities; Cash to Private Foundations)

Two categories of contributions are subject to a 30% limit:

• Long-term capital gain property contributed to public charities: Under IRC 170(b)(1)(C)(i), contributions of capital gain property (property that, if sold, would produce long-term capital gain) to public charities are deductible up to 30% of contribution base (with fair market value deduction). The taxpayer may elect under IRC 170(b)(1)(C)(iii) to reduce the contribution by all appreciation and thereby claim the higher 50%/60% limit, but this election converts the deductible amount to basis, which is often less favorable. The election must be made on the return for the year of contribution.
• Cash contributions to private foundations: Under IRC 170(b)(1)(B), cash contributions to private foundations (other than those described in IRC 170(b)(1)(F)) are subject to a 30% limit.

The combined deduction for 50%/60%-limit contributions plus 30%-limit contributions may not exceed 50% of the contribution base in any year (for the 50% overall cap) or 60% (for categories subject to the 60% cap). See IRC 170(b)(1)(C)(i).

Tier 3: 20% Limit (Capital Gain Property to Private Foundations)

Under IRC 170(b)(1)(D)(i), contributions of capital gain property to or for the use of private foundations (other than certain operating foundations) are deductible up to 20% of contribution base. This is the most restrictive bucket. An exception applies for qualified appreciated stock contributed to certain private foundations: deduction is at fair market value, subject to the 20% limit. IRC 170(b)(1)(D)(ii) and IRC 170(e)(5).

4. Stacking and Absorption Order for Multiple Contribution Types

When a taxpayer makes contributions of different types in the same year, and also has carryovers from prior years, the absorption sequencing determines which contributions reduce current-year income and which carry forward. The rules are set out in IRC 170(b) and Treas. Reg. 1.170A-8 and 1.170A-10.

Step 1: Determine the Applicable Limits

Compute the taxpayer's contribution base (generally AGI for individuals). Compute the maximum allowable deduction at each tier: 60% ceiling (cash to public charities), 30% ceiling (capital gain property to public charities, or cash to private foundations), and 20% ceiling (capital gain property to private foundations).

Step 2: Absorb Current-Year 50%/60%-Limit Contributions First

Current-year contributions in the 50%/60%-limit tier are applied against the contribution base ceiling before any other contributions. If these contributions exceed the ceiling, the excess carries forward.

Step 3: Absorb 30%-Limit Contributions

After Step 2, 30%-limit contributions (both current-year and carryovers from prior years, with oldest carryovers first) are applied, but only to the extent the sum of Step 2 contributions plus the Step 3 contributions does not exceed the overall 50%/60% ceiling. The 30% sub-ceiling provides an additional limitation within the overall ceiling.

Step 4: Absorb 20%-Limit Contributions

Finally, 20%-limit contributions are applied, subject to the 20% sub-ceiling and the overall ceiling. These are absorbed last and are therefore the most likely to be carried forward.

Carryover Priority

Within each tier, current-year contributions are absorbed before carryovers from prior years. Among carryovers of the same tier, earlier-year carryovers are absorbed before later-year carryovers (oldest first). This rule ensures that carryovers closest to expiration are absorbed first, reducing the risk that a carryover expires unused.

5. Substantiation Requirements: The Five-Tier Ladder

IRC 170(f) establishes a graduated substantiation framework. The level of documentation required scales with the size and type of the contribution. Failure to satisfy the applicable tier results in complete disallowance of the deduction; courts have consistently declined to allow retroactive or substitute substantiation. See Treas. Reg. 1.170A-13 and 1.170A-16.

Tier 1: Cash Contributions Under $250

Under IRC 170(f)(17), a taxpayer may not deduct a cash contribution (in any amount) unless the taxpayer maintains a bank record or written communication from the donee organization. The bank record or written communication must show the name of the donee organization, the date of the contribution, and the amount. Personal records, unsubstantiated diary entries, or oral testimony are not sufficient. A cancelled check, electronic fund transfer record, or credit card statement satisfies this requirement for contributions under $250.

Tier 2: Contributions of $250 or More (Cash or Non-Cash) -- Contemporaneous Written Acknowledgment

IRC 170(f)(8) requires a contemporaneous written acknowledgment (CWA) for any single contribution of $250 or more, whether cash or non-cash. The CWA must:

• State the amount of cash contributed (or describe the non-cash property).
• State whether the donee organization provided any goods or services in exchange for the contribution. If yes, describe the goods or services and provide a good-faith estimate of their fair market value.
• Be obtained by the donor no later than the date the return is filed or the due date of the return (including extensions), whichever is earlier.

"Contemporaneous" means the CWA must be in hand before the earlier of the return due date or the filing date. An acknowledgment obtained after the return is filed does not satisfy this requirement, even if the contribution itself was timely made and otherwise fully deductible. See Treas. Reg. 1.170A-13(f).

Tier 3: Non-Cash Contributions Over $500 -- Form 8283 Part A

Under IRC 170(f)(11)(A) and (B), a taxpayer claiming a deduction for non-cash property contributions exceeding $500 (in total for the year) must attach Form 8283 (Noncash Charitable Contributions) to the return. Part A of Form 8283 is completed for contributions of $500 to $5,000 per item (or group of similar items). Part A requires the taxpayer to describe the property, the date acquired, the method of acquisition, the cost or adjusted basis, the date of contribution, the fair market value, and the method used to determine fair market value.

Tier 4: Non-Cash Contributions Over $5,000 -- Qualified Appraisal and Form 8283 Part B

Under IRC 170(f)(11)(C), deductions for non-cash property contributions exceeding $5,000 (other than publicly traded securities, which have their own rules) require: (1) a qualified appraisal by a qualified appraiser, and (2) a completed Form 8283 Part B with the appraiser's signature. The qualified appraisal must be obtained within the required window (see Section 6). An exception applies for contributions of publicly traded securities: these do not require a qualified appraisal regardless of amount, though a reliable method of determining fair market value (e.g., average of high and low trading price on the contribution date) must be used.

Tier 5: Non-Cash Contributions Over $500,000 -- Full Appraisal Attached

Under IRC 170(f)(11)(D), if the claimed deduction for non-cash property exceeds $500,000, the complete qualified appraisal must be attached to the return (not merely a summary on Form 8283). The full appraisal report becomes part of the return filing. This requirement most commonly arises in conservation easement contributions and large real property donations.

6. Qualified Appraisal Requirements Under Reg. 1.170A-17

The substantiation rules for non-cash contributions over $5,000 hinge on two linked concepts: a "qualified appraisal" and a "qualified appraiser." Both are defined in Treas. Reg. 1.170A-17, finalized in 2018 (T.D. 9836).

Qualified Appraisal: Content Requirements

Under Treas. Reg. 1.170A-17(a)(3), a qualified appraisal must include, at a minimum:

• A description of the property in sufficient detail for another person to identify it.
• The physical condition of the property (for tangible personal property).
• The date or expected date of contribution.
• The terms of any agreement or understanding relating to the use, sale, or other disposition of the property.
• The name, address, and taxpayer identification number of the qualified appraiser.
• The qualifications of the qualified appraiser, including background, experience, education, and membership in professional appraisal associations.
• A statement that the appraisal was prepared for income tax purposes.
• The date or dates on which the property was appraised.
• The appraised fair market value on the date or expected date of contribution.
• The method of valuation and the specific basis for the valuation.

Qualified Appraisal: Timing Window

Under Treas. Reg. 1.170A-17(a)(4), the appraisal must be conducted no earlier than 60 days before the contribution date and no later than the due date (including extensions) of the return on which the deduction is first claimed. This window is a bright-line rule. Courts have consistently held that an appraisal conducted outside this window -- even by a single day -- fails to constitute a qualified appraisal and results in full disallowance of the deduction for contributions over the $5,000 threshold.

Qualified Appraiser: Who May Conduct the Appraisal

Under Treas. Reg. 1.170A-17(b), a qualified appraiser is an individual who:

• Has earned an appraisal designation from a recognized professional appraisal organization, or has otherwise met minimum education and experience requirements.
• Regularly performs appraisals for which the appraiser receives compensation.
• Meets the education and experience requirements set forth in Treas. Reg. 1.170A-17(b)(2).
• Is not excluded by Treas. Reg. 1.170A-17(b)(3): the appraiser may not be the donor, the donee, a party to the transaction, an employee or family member of any of the foregoing, or any person whose fee is contingent on the appraised value of the property (except as otherwise permitted by the regulations for certain types of property).

Acknowledgment by Donee on Form 8283

For contributions of property over $5,000, Part B of Form 8283 must be signed by an authorized officer of the donee organization, acknowledging that the organization received the described property on the date stated. The donee's signature on Form 8283 does not constitute an agreement by the donee to the claimed fair market value; it is solely an acknowledgment of receipt. If the donee disposes of the contributed property within three years of the contribution date, it must file Form 8282 (Donee Information Return) within 125 days of disposition, reporting the amount received on disposition. This information assists the IRS in identifying overvalued contributions.

7. Contributed Property: Ordinary Income Property and Capital Gain Property Reductions Under IRC 170(e)

The general rule for non-cash contributions is that the deductible amount equals the fair market value of the contributed property on the date of contribution. However, IRC 170(e) requires that fair market value be reduced in certain circumstances. These reductions interact with the AGI limitation tiers described in Section 3.

Ordinary Income Property: Reduction to Adjusted Basis

Under IRC 170(e)(1)(A), the deductible amount of contributed property must be reduced by the amount of gain that would not have been long-term capital gain if the property had been sold at fair market value. This means the deduction for "ordinary income property" is limited to the property's adjusted basis (not its fair market value). Ordinary income property includes:

• Inventory and property held for sale to customers in the ordinary course of business.
• Property held for one year or less (short-term capital assets).
• Property subject to depreciation recapture that would be treated as ordinary income under IRC 1245 or 1250 to the extent of the recapture amount (only the recapture portion is reduced; any remaining appreciation may retain its capital gain character).
• Section 306 stock (certain preferred stock issued in reorganizations).
• Capital assets described in IRC 341 (collapsible corporations, now largely obsolete).

Capital Gain Property: Two Reduction Scenarios Under IRC 170(e)(1)(B)

Capital gain property (property that would produce long-term capital gain if sold at fair market value) ordinarily is deductible at fair market value. However, IRC 170(e)(1)(B) requires reduction to adjusted basis in two scenarios:

1. Tangible personal property contributed to a public charity for an unrelated use: If the donee's use of the tangible personal property is unrelated to the donee's exempt purpose (the "related use" rule), the deduction is reduced by all appreciation. The donor bears the burden of establishing that the property will be used for a related purpose. Artwork donated to a museum for display satisfies the related use test; artwork donated to a hospital for sale does not.
2. Capital gain property contributed to a private foundation: Except for qualified appreciated stock (discussed below), all capital gain property contributed to a private foundation is reduced to adjusted basis under IRC 170(e)(1)(B)(ii).

Qualified Appreciated Stock Exception

Under IRC 170(e)(5), "qualified appreciated stock" contributed to a private foundation (other than a private operating foundation) is deductible at fair market value, subject to the 20% AGI limit. Qualified appreciated stock means any stock for which market quotations are readily available on an established securities market and which is capital gain property. However, the fair market value deduction for qualified appreciated stock is limited to the amount by which the stock's fair market value exceeds the taxpayer's basis in all contributed stock of the same issuer during the year.

Interaction with AGI Limits

The IRC 170(e) reduction is applied before the AGI limitation tiers are applied. The reduced amount is then subject to the appropriate tier cap. If, after reduction, the contribution falls into a different AGI tier than it would without reduction, the tier applicable to the reduced amount governs.

8. Conservation Easements: Requirements, Valuation, and Listed Transaction Exposure

A contribution of a qualified conservation contribution is deductible under IRC 170(h). A "qualified conservation contribution" is a contribution of a qualified real property interest, made exclusively for conservation purposes, to a qualified organization. All three elements must be satisfied.

Qualified Real Property Interest

Under IRC 170(h)(2), a qualified real property interest is:

• The entire interest in the real property (other than mineral rights).
• A remainder interest in real property.
• A restriction (granted in perpetuity) on the use that may be made of the real property (a "conservation easement" in the traditional sense).

The perpetuity requirement is absolute and has been the basis for many IRS disallowances: any provision in the easement deed or underlying agreement that allows modification or extinguishment outside the narrow circumstances permitted by Treas. Reg. 1.170A-14(g) results in disallowance.

Conservation Purpose

Under IRC 170(h)(4), the contribution must be made exclusively for one or more of the following conservation purposes: (1) preservation of land for public outdoor recreation or education; (2) protection of a relatively natural habitat for fish, wildlife, or plants; (3) preservation of open space (including farmland and forest land) for scenic enjoyment or pursuant to a governmental conservation policy; or (4) preservation of an historically important land area or certified historic structure. The conservation purpose must be protected in perpetuity: the easement must prohibit uses of the land that are inconsistent with the conservation purpose.

Qualified Organization

For a conservation easement contribution, the donee must be a governmental unit described in IRC 170(b)(1)(A)(v) or a publicly supported organization described in IRC 170(b)(1)(A)(vi), and the organization must have a commitment to protect the conservation purposes of the donation and the resources to enforce the restrictions. A land trust that is a public charity and that has a written policy for monitoring and enforcing conservation easements satisfies this requirement in most cases.

Valuation of Conservation Easements

The deductible amount of a conservation easement is the fair market value of the easement itself, which equals the difference between the fair market value of the encumbered property before the easement and its fair market value after the easement is placed. This "before and after" method is the only accepted methodology under Treas. Reg. 1.170A-14(h)(3). The valuation depends on the extent to which development or other potential uses of the property are restricted by the easement. Overvaluation of conservation easements has been a persistent enforcement priority of the IRS.

Enhanced Deduction for Farmers and Ranchers

Under IRC 170(b)(1)(E), qualified farmers and ranchers (whose gross income from farming or ranching exceeds 50% of gross income for the year) may deduct qualified conservation contributions up to 100% of their contribution base (rather than the standard 30% or 50% limit), with carryover for up to 15 years rather than 5. Verify current eligibility requirements at IRS.gov.

9. The Five-Year Carryover and Absorption Sequencing

Under IRC 170(d)(1), if a taxpayer's charitable contributions in a given year exceed the applicable AGI limits, the excess carries forward for up to five succeeding tax years. The carryover is treated as a contribution of the same type (and therefore subject to the same AGI limit tier) in each carryover year.

Carryover Character Preservation

The carryover retains its character from the year of contribution. A 30%-limit carryover from Year 1 remains a 30%-limit carryover in Years 2 through 6 -- it does not convert to a 60%-limit contribution simply because it is being absorbed in a later year in which the taxpayer makes no other 30%-limit contributions. This character preservation is critical: it means the carryover continues to be subject to both the 30% sub-ceiling and the overall 50%/60% ceiling in each carryover year.

Absorption Sequencing in Carryover Years

In each carryover year, current-year contributions are absorbed first (in the same stacking order described in Section 4), then carryovers of the same tier are absorbed from oldest to newest. The taxpayer should maximize the absorption of older carryovers because they are closest to their five-year expiration. If a taxpayer has a Year 1 carryover and a Year 3 carryover of the same tier, the Year 1 carryover is absorbed first in Year 4 (the year in which both coexist as carryovers, and Year 1's carryover is entering its fourth year).

Death and Carryover Termination

Unused charitable contribution carryovers do not transfer to the decedent's estate or to heirs. If a taxpayer dies with an unexpired carryover, the carryover is permanently lost. This rule creates planning urgency for taxpayers in poor health who hold large carryovers: accelerating income in the final years (to increase the contribution base ceiling and absorb more of the carryover) may be warranted. Verify current rules and any applicable OBBBA changes at IRS.gov.

Alternative Minimum Tax Considerations

For taxpayers subject to the alternative minimum tax (AMT) under IRC 55, charitable contribution deductions are allowed in computing alternative minimum taxable income (AMTI) to the same extent as for regular tax. The charitable deduction is not a tax preference or adjustment item for AMT purposes. However, the AMT can reduce regular tax liability in ways that affect the practical value of the deduction.

10. OBBBA 2026 Non-Itemizer Above-the-Line Deduction

The One Big Beautiful Bill Act (OBBBA), enacted in 2025, added IRC 170(p), creating a new above-the-line deduction for charitable contributions by taxpayers who do not itemize their deductions on Schedule A. This section summarizes the OBBBA non-itemizer deduction in the context of the broader IRC 170 framework. For a complete practitioner guide focused solely on this provision, see the companion guide at the OBBBA non-itemizer charitable deduction practitioner guide.

Key Features of IRC 170(p)

Effective for tax years beginning after December 31, 2025, IRC 170(p) permits non-itemizers to deduct qualifying cash contributions to public charities above a floor of 0.5% of AGI, up to specified dollar caps set forth in the statute. Key characteristics:

• Above-the-line deduction: The non-itemizer deduction is an "above-the-line" deduction under IRC 62, reducing AGI directly rather than requiring itemization on Schedule A. This makes it available to taxpayers who take the standard deduction.
• Cash only: Only cash contributions qualify; non-cash property contributions do not qualify for the non-itemizer above-the-line deduction.
• Public charities only: Contributions must be to organizations described in IRC 170(b)(1)(A). Contributions to private foundations, donor-advised funds, and supporting organizations generally do not qualify.
• AGI floor: The 0.5% of AGI floor means only the amount exceeding 0.5% of the taxpayer's AGI is eligible. This prevents the deduction from benefiting taxpayers with only token charitable contributions relative to their income.
• No carryover: Amounts disallowed because they exceed the dollar cap do not carry forward to future years, unlike the standard five-year carryover under IRC 170(d).
• Interaction with itemized deduction: A taxpayer who itemizes deductions continues to claim the regular IRC 170(a) itemized deduction on Schedule A and does not also claim the IRC 170(p) non-itemizer deduction.

The OBBBA also made changes to the AGI floor for itemizers claiming the standard IRC 170(a) deduction, specifically a 0.5% of AGI floor for itemizers' cash contributions. Practitioners must consult the final statutory text and any IRS guidance for the precise implementation of these changes. Verify all OBBBA provisions and effective dates at IRS.gov.

11. Reference Table: Contribution Types, AGI Limits, Substantiation, and Carryover

The following table summarizes the key parameters for common contribution types. Thresholds, forms, and rules are subject to change; verify all items at IRS.gov and against the current year's instructions for Form 8283 before advising clients.

Frequently Asked Questions