Summary of Federal Laws
Tax
Tax Issues Related to Donations
Intellectual Property Donations: American Jobs Creation Act of 2004
Public Law 108-357
26 USC § 170
Under a provision of the American Jobs Creation Act of 2004, for contributions of patents and certain other intellectual property made to a 501(c)(3) after June 3, 2004 the taxpayer's initial contribution deduction is limited to the lesser of the donor's basis in the contributed property or the FMV of the property.
The donor of intellectual property will be able to claim a second deduction related to the amount of money the charitable organization earned from the property during a certain time period after the donation. Donors would not be able to claim the second deduction if they donated their intellectual property to private foundations. This restriction also applies to private foundations operated by colleges and universities.
General Explanation of Tax Legislation Issued in the 108th Congress (May 2005)
The Joint Committee on Taxation has issued an explanation of all tax legislation passed by the 108th Congress, including the American Jobs Creation Act of 2004.
Final Rule: Information Returns by Donees Relating to Qualified Intellectual Property Contributions, 73 Fed. Reg. 18709, April 7, 2008. Effective 4/7/08
This document contains final regulations that provide guidance for filing information returns by donees relating to qualified intellectual property contributions. These final regulations reflect changes to the law made in 2004. The regulations affect donees receiving net income from qualified intellectual property contributions made after June 3, 2004. This text contains income tax regulations required under the American Jobs Creation Act of 2004. Section 882(c)(1) of that Act amended section 6050L of the tax code to require donees to make an annual information return that reports qualified donee income for the taxable year
if the donor filed timely notice of the donor's intent to treat a charitable contribution as a qualified intellectual property contribution
and net income was produced by the donation
and the income was received or accrued during a 10 year period beginning on the date of contribution.The donee is absolved of the need to file a return after the expiration of the legal life of the property.
The information required to be reported on the return is as follows:
(1) The name, address, taxable year, and employer identification number of the donee making the information return;
(2) The name, address, and taxpayer identification number of the donor;
(3) A description of the qualified intellectual property in sufficient detail to identify the qualified intellectual property received by such donee;
(4) The date of the contribution to the donee;
(5) The amount of net income of the donee for the taxable year that is properly allocable to the qualified intellectual property (determined without regard to paragraph (10)(B) of section 170(m) and
with the modifications described in paragraphs (5) and (6) of such section); and
(6) Such other information as may be specified by the form or its instructions.
A copy of the return must be furnished to the donor of the property.
A donee is expected to file Form 8899 (Notice of Income from Donated Intellectual Property) by the last day of the first full month following the close of the donee's taxable year to which the net income from the contribution is properly allocable.
Section 682: Treatment of Intellectual Property
Resources
CCH Tax Briefing on American Jobs Creation Act of 2004
new page 1/14/05
updated 6/12/05 to add proposed and temporary regulations
updated 7/6/05 to add link to Joint Committee on Taxation document
updated 4/20/09 on final rule on IP Donations
links updated 5/29/08 rab
CFR updated 11/10/08 RAB
updated 2/23/09 to add compliance partners
links updated 3/18/09 rab
compliance box updated 5/13/09 rab
Last Revised 13-May-09 03:14 PM.
