Charitable Contributions by Corporations

Corporations are generally limited in their ability to deduct charitable contributions to 10 percent of their taxable income (before NOL and capital loss carrybacks). Under the Katrina Act, for the period beginning August 28, 2005 and ending December 31, 2005, the deduction limitation for qualified contributions is increased to taxable income. It appears that deductible contribution amounts between January 1, 2005 and August 27, 2005 cannot exceed the 10 percent amount, but the amount after August 27 can be greater than 90 percent with the overall limitation being 100 percent of the taxable income. The act does require that corporations substantiate that their qualified contributions are for relief efforts related to Hurricane Katrina. Special rules exist for calculating deductible contributions.

From December 2005

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