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authorizing the contributions was adopted by

Larger deduction. A larger deduction is

There are penalties for failure to file these

the board of directors during the tax year. Also

allowed for certain contributions of:

forms on time and for overstating the pension

•

attach a copy of the resolution.

Inventory and other property to certain

plan deduction. See sections 6652(e) and

organizations for use in the care of the ill,

6662(f).

Charitable contributions over the 10%

needy, or infants (see section 170(e)(3) and

Form 5500, Annual Return/Report of

limitation may not be deducted for the tax year

Regulations section 1.170A-4A);

Employee Benefit Plan. File this form for a plan

but may be carried over to the next 5 tax years.

•

Scientific equipment used for research to

that is not a one-participant plan (see below).

Substantiation requirements. Generally,

institutions of higher learning or to certain

Form 5500-EZ, Annual Return of

no deduction is allowed for any contribution of

scientific research organizations (other than by

One-Participant (Owners and Their Spouses)

$250 or more unless the fund gets a written

personal holding companies and service

Retirement Plan. File this form for a plan that

acknowledgment from the donee organization

organizations) (see section 170(e)(4)); and

•

only covers the owner (or the owner and his or

that shows the amount of cash contributed,

Computer technology and equipment for

her spouse) but only if the owner (or the owner

describes any property contributed, and, either

educational purposes.

and his or her spouse) owns the entire

gives a description and a good faith estimate of

Contributions of computer technology

business.

the value of any goods or services provided in

and equipment for educational purposes. A

return for the contribution or states that no

Travel, meals, and entertainment. Subject to

fund may take an increased deduction under

goods or services were provided in return for

the limitations and restrictions discussed

section 170(e)(6) for qualified contributions of

the contribution. The acknowledgment must be

below, the fund can deduct ordinary and

computer technology or equipment for

obtained by the due date (including extensions)

necessary travel, meals, and entertainment

educational purposes. Computer technology

of the fund’s return, or, if earlier, the date the

expenses paid or incurred in its trade or

or equipment means computer software,

return is filed. Do not attach the

business. Also, special rules apply to

computer or peripheral equipment, and fiber

acknowledgment to the tax return, but keep it

deductions for gifts, skybox rentals, luxury

optic cable related to computer use. A

with the fund’s records. These rules apply in

water travel, convention expenses, and

contribution is a qualified contribution if:

•

addition to the filing requirements for Form

entertainment tickets. For details, see section

It is made to an eligible donee (see below);

•

8283, Noncash Charitable Contributions,

274 and Pub. 463.

Substantially all the donee property’s use is:

described below.

Travel. The fund cannot deduct travel

1. Related to the purpose or function of the

expenses of any individual accompanying a

For more information on substantiation and

donee,

recordkeeping requirements, see the

corporate officer or employee, including a

2. For use within the United States, and

regulations under section 170 and Pub. 526,

spouse or dependent of the officer or

3. For educational purposes.

•

employee, unless:

Charitable Contributions.

The contribution is made not later than 3

•

That individual is an employee of the

years after the date the taxpayer acquired or

Contributions to organizations

corporation and

substantially completed the construction of the

conducting lobbying activities. Contributions

•

His or her travel is for a bona fide business

property;

made to an organization that conducts lobbying

•

purpose and would otherwise be deductible by

The original use of the property is by the

activities are not deductible if:

•

that individual.

donor or the donee;

The lobbying activities relate to matters of

•

Meals and entertainment. Generally, the

The property is not transferred by the donee

direct financial interest to the donor’s trade or

fund can deduct only 50% of the amount

for money, services, or other property, except

business and

•

otherwise allowable for meals and

for shipping, transfer, and installation costs;

The principal purpose of the contribution was

•

entertainment expenses paid or incurred in its

The property fits productively into the

to avoid Federal income tax by obtaining a

trade or business. In addition (subject to

donee’s education plan; and

deduction for activities that would have been

•

exceptions under section 274(k)(2)):

The property meets standards, if any, that

nondeductible under the lobbying expense

•

Meals must not be lavish or extravagant;

may be prescribed by future regulations, to

rules if conducted directly by the donor.

•

A bona fide business discussion must occur

assure it meets minimum functionality and

Contributions of property other than

during, immediately before, or immediately

suitability for educational purposes.

cash. If the fund contributes property other

after the meal; and

than cash and claims over a $500 deduction

•

Eligible donee. The term “eligible donee”

An employee of the fund must be present at

for the property, it must attach a schedule to

means:

the meal.

the return describing the kind of property

•

See section 274(n)(3) for a special rule that

An educational organization that normally

contributed and the method used to determine

applies to expenses for meals consumed by

maintains a regular faculty and curriculum and

its fair market value (FMV). Closely held funds

individuals subject to the hours of service limits

has a regularly enrolled body of pupils in

must complete Form 8283 and attach it to their

of the Department of Transportation.

attendance at the place where its educational

returns. All other funds generally must

activities are regularly conducted,

Membership dues. The fund may deduct

complete and attach Form 8283 to their returns

•

A section 501(c)(3) entity organized primarily

amounts paid or incurred for membership dues

for contributions of property (other than money)

for purposes of supporting elementary and

in civic or public service organizations,

if the total claimed deduction for all property

secondary education, or

professional organizations, business leagues,

contributed was more than $5,000.

•

A public library (as described in section

trade associations, chambers of commerce,

If the fund made a “qualified conservation

170(e)(6)(B)(i)(lll)).

boards of trade, and real estate boards.

contribution” under section 170(h), also include

However, no deduction is allowed if a principal

Exceptions. The following exceptions

the FMV of the underlying property before and

purpose of the organization is to entertain, or

apply to the above rules for computer

after the donation, as well as the type of legal

provide entertainment facilities for, members or

technology and equipment:

interest contributed, and describe the

•

their guests. In addition, funds may not deduct

Contributions to private foundations may

conservation purpose benefited by the

membership dues in any club organized for

qualify if the foundation contributes the

donation. If a contribution carryover is included,

business, pleasure, recreation, or other social

property to an eligible donee within 30 days

show the amount and how it was determined.

purpose.

after the contribution and notifies the donor of

Reduced deduction for contributions of

Entertainment facilities. The fund cannot

the contribution. For more details, see section

certain property. For a charitable contribution

deduct an expense paid or incurred for a

170(e)(6)(C).

of property, the fund must reduce the

•

facility (such as a yacht or hunting lodge) used

For contributions of property reacquired by

contribution by the sum of:

for an activity usually considered

•

the manufacturer of the property, the 3 year

The ordinary income and short-term capital

entertainment, amusement, or recreation.

period begins on the date that the original

gain that would have resulted if the property

construction of the property was substantially

Note: The fund may be able to deduct

were sold at its FMV, and

•

completed. Also, the original use of the

otherwise nondeductible meals, travel, and

For certain contributions, the long-term

property may be by someone other than the

entertainment expenses if the amounts are

capital gain that would have resulted if the

donor or the donee.

treated as compensation and reported on Form

property were sold at its FMV.

W-2 for an employee or on Form 1099-MISC

The reduction for the long-term capital gain

Pension, profit-sharing, etc., plans. Also

for an independent contractor.

applies to:

include on line 22 the deduction for

•

Contributions of tangible personal property

contributions to qualified pension,

Deduction for clean-fuel vehicles and

for use by an exempt organization for a

profit-sharing, or other funded-deferred

certain refueling property. Section 179A

purpose or function unrelated to the basis for

compensation plans. Employers who maintain

allows a deduction for part of the cost of

its exemption and

such a plan generally must file one of the forms

qualified clean-fuel vehicle property and

•

Contributions of any property to or for the

listed below, even if the plan is not a qualified

qualified clean-fuel vehicle refueling property

use of certain private foundations except for

plan under the Internal Revenue Code. The

placed in service during the tax year. For more

stock for which market quotations are readily

filing requirement applies even if the fund does

information, see Pub. 535, Business

available (section 170(e)(5)).

not claim a deduction for the current tax year.

Expenses.

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Instructions For Form 1120-Ric - U.s. Income Tax Return For Regulated Investment Companies - 2002 Page 8

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