On August 24th 2018 the IRS issued proposed regulations regarding recent state’s creation of state tax credit programs in exchange for charitable contributions. A number of states, including California, have proposed creating charitable funds where taxpayers would receive a state tax credit for contributions to the fund. The IRS has taken the position that these proposed transactions are quid pro quo and that a full charitable deduction is not allowed. The tax credits constitute return benefits and therefore reduce the amount of the charitable contribution. There are a few exceptions, one for state tax deductions along with a De Minimus exception for credits that do not exceed 15% of the taxpayer’s payment. A taxpayer may also decline the tax credit to receive the full charitable contribution

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