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New IRS Regulation Could Impact Giving to Foreign Missions

The IRS explains the new rule.

The IRS has proposed a new regulation that could have a significant impact on charitable giving to foreign missions. The new regulation would add paragraph (e)(12) to section 1.861-8 of the income tax regulations. The new paragraph provides that a taxpayer must "allocate" a charitable contribution deduction to "United States source income" or "foreign source income." In explaining the new rule, the IRS has stated:

The taxpayer shall allocate a deduction for a charitable contribution solely to United States source gross income if (1) the taxpayer, at the time of the contribution, both designates the contribution for use solely in the United States and reasonably believes that the contribution will be so used, and if (2) the contribution is not allocable to foreign source gross income under the following rule. The taxpayer shall allocate a deduction for a charitable contribution to foreign ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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Posted:
  • May 1, 1991

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