Contents

OTHER GIFTS OF REMAINDER INTERESTSAlso, an income tax charitable contribution is allowed• if a person owns 100 acres of land and makes a contribution of 50 acres toa charitable organization, 47 or• for a contribution of property to a charitable organization when the organizationis given the right, as a tenant in common with the donor, to possession,dominion, and control of the property for a portion of each yearappropriate to its interest in the property. 48A charitable contribution in perpetuity of an interest in property not in trust,when the donor transfers some specific rights and retains other substantialrights, is not considered a contribution of an undivided portion of the donor’sinterest in property under this rule. 49 Thus, for example, a charitable deductionwas not allowed for the value of an immediate and perpetual gift (not in trust) ofan interest in original historic motion picture films to a charitable organizationwhen the donor retained the exclusive right to make reproductions of the filmsand to exploit the reproductions commercially. 50 Likewise, a charitable deductionwas not allowed for the contribution of an overriding royalty interest or a netprofits interest to a charitable organization by the owner of a working interestunder an oil and gas lease, because the owner carved out and contributed only aportion of the interest. 51In one instance, a person contributed to a tax-exempt university a license touse a patent, retaining the right to license the patent to others. The IRS ruled thatthis license was similar to the partial interest in motion picture films referencedabove, in that it did not constitute a fraction or percentage of each and every substantialinterest or right that the person owned in the property. The agency heldthat a charitable contribution deduction was not allowable in this instance. 52The standard concerning conditional gifts 53 applies in this context in determiningwhether a remote possibility of divestment will trigger the partial interestrestrictions. 54Despite the constraints, this body of law allows creative tax and charitableplanning, as indicated in the following examples.• An individual transferred an undivided two-fifths interest in land to a charitableorganization and retained an undivided three-fifths interest in theproperty. At the time of this transfer, this individual intended to make a giftto the same charitable organization of the retained interest. However, theindividual leased the retained interest to the charitable organization at a fairrental value, with an option in the donee to purchase the retained interest.The lease provided that if, during its term, the individual made further giftsto the charitable organization of all or part of the three-fifths interest, the47 Id.48 Id.49 Id.50 Id.51 Rev. Rul. 88-37, 1988-1 C.B. 97.52 Rev. Rul. 2003-28, 2003-11 I.R.B. 594.53 See § 10.4.54 Reg. § 1.170A-7(a)(3). 510