Not a tax lawyer, but I did go to Harvard Law School. It seems to me that the CARES Act (which temporarily extends the charitable contribution limit to 100% of AGI) expressly addresses this sort of situation.
“Any qualified contribution shall be allowed as a deduction only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s contribution base (as defined in subparagraph (H) of section 170(b)(1) of such Code) over the amount of all other charitable contributions allowed under section 170(b)(1) of such Code.”
Let’s unpack that a bit.
Any qualified contribution is allowed as a deduction—that’s the starting point. Next, how much can the qualified contributions be? First, look at the “amount of ALL OTHER charitable contributions” allowed under 26 U.S.C. 170(b)(1) -- which is precisely where you’re getting the 30% limitation for donations to private foundations (see 170(b)(1)(B)). https://www.law.cornell.edu/uscode/text/26/170
Next, look at the “contribution base” in 170(b)(1)(H) --well, this is simple, because 170(b)(1)(H) just defines “contribution base” as “adjusted gross income (computed without regard to any net operating loss carryback to the taxable year).” If the latter part isn’t pertinent to your taxpayer, then we’re just talking about AGI here.
Putting it all together, the CARES Act says that you can deduct all qualified contributions up to the amount that your AGI exceeds “all other charitable contributions,” which would include the gift to a private foundation.
“The AGI limitations can be ‘stacked’ on one another and each contribution is subject to the separate limit. For instance, a taxpayer could have an AGI of $100 and make a $30 cash gift to a private foundation, a $30 cash gift to a donor advised fund, and a $40 cash to an operating public charity, and all of the deductions would count against income.”
Not a tax lawyer, but I did go to Harvard Law School. It seems to me that the CARES Act (which temporarily extends the charitable contribution limit to 100% of AGI) expressly addresses this sort of situation.
Check out the CARES Act (https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf), section 2205(a)(1)(A)(i).
That section says:
“Any qualified contribution shall be allowed as a deduction only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s contribution base (as defined in subparagraph (H) of section 170(b)(1) of such Code) over the amount of all other charitable contributions allowed under section 170(b)(1) of such Code.”
Let’s unpack that a bit.
Any qualified contribution is allowed as a deduction—that’s the starting point. Next, how much can the qualified contributions be? First, look at the “amount of ALL OTHER charitable contributions” allowed under 26 U.S.C. 170(b)(1) -- which is precisely where you’re getting the 30% limitation for donations to private foundations (see 170(b)(1)(B)). https://www.law.cornell.edu/uscode/text/26/170
Next, look at the “contribution base” in 170(b)(1)(H) --well, this is simple, because 170(b)(1)(H) just defines “contribution base” as “adjusted gross income (computed without regard to any net operating loss carryback to the taxable year).” If the latter part isn’t pertinent to your taxpayer, then we’re just talking about AGI here.
Putting it all together, the CARES Act says that you can deduct all qualified contributions up to the amount that your AGI exceeds “all other charitable contributions,” which would include the gift to a private foundation.
As an article by Deloitte puts it, “Practically speaking, this means that the deduction for all other types of charitable contributions (e.g., non-cash/property contributions) will be computed and deducted first, based on the taxpayer’s AGI. If there is still AGI remaining to be offset, the taxpayer may elect to take a deduction for the additional qualified cash contributions up to the taxpayer’s entire remaining AGI.” https://www.cpajournal.com/2021/06/04/charitable-contribution-benefits-extended-by-the-consolidated-appropriations-act/ See also this article, which talks about “stacking” contributions first to a DAF and then cash up to the amount of AGI: https://www.aefonline.org/blog/stacking-charitable-contributions-2021
And most directly, see this article from tax lawyers at Foley & Lardner (a major national firm with nearly a billion in revenue last year), https://www.foley.com/en/insights/publications/2021/01/the-consolidated-appropriations-act, which says this:
“The AGI limitations can be ‘stacked’ on one another and each contribution is subject to the separate limit. For instance, a taxpayer could have an AGI of $100 and make a $30 cash gift to a private foundation, a $30 cash gift to a donor advised fund, and a $40 cash to an operating public charity, and all of the deductions would count against income.”
Best of luck,
Stuart Buck
Thanks, Stuart! This answer was outstanding. I’ll follow up with you privately about the bounty payment.