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INTERNATIONAL GIVING BY CORPORATIONSprepared to justify how the expenditures in fact promote the corporation’s businessinterests.In-kind gifts of company products are also deductible. Examples include pharmaceuticalproducts that are sent to an overseas hospital or computer equipmentthat is given to a school. The amount of the deduction for such gifts is governed bythe general rules applicable to gifts for use outside the United States (discussed inthis chapter). There are special rules relating to gifts of inventory, by virtue of whichthe deduction may be as great as twice the cost basis inherent in the donated property.12 In general, the rules concerning gifts of tangible personal property allow adonor to deduct only the acquisition cost of the property, rather than the current fairmarket value, if the property is of a type the donor normally sells in its business. 13Another method of supporting a charity is to make in-kind gifts of the use ofa corporation’s facilities or personnel. This type of charitable giving includesoccupancy of surplus office space, use of corporate printing or computer facilities,and loan of corporate staff services. As expenses of these facilities and personnelwould have been incurred regardless of the donation, the expensesassociated with this type of giving are deductible under U.S. law as businessexpenses. (There is no U.S. charitable deduction for gifts of the use of property 14or for gifts of services. 15 )§ 20.4 GRANTS OF FUNDS FROM U.S. CORPORATION-RELATEDFOUNDATION TO FOREIGN CHARITYLarge American corporations often consider establishing overseas foundations.The present practice, however, is that an American company with an establishedphilanthropic program makes its outbound grants through its U.S. corporatefoundation. A corporate foundation is almost always a private foundation underU.S. law. 16 Nothing in the U.S. tax statutes or regulations prohibits overseasgrant-making by private foundations.(a) Taxable ExpendituresOf considerable concern to a private foundation is avoidance of making a taxableexpenditure while engaging in grant-making. U.S. law categorizes certaintypes of expenditures as taxable ones if made by private foundations, and it leviessignificant penalties for engaging in these practices. 17The term taxable expenditure means any amount paid or incurred by a privatefoundation• as a grant to an organization unlessthe organization is a public charity or an exempt operating foundation,18 or12 IRC § 170(c)(3). See § 9.3.13 See § 4.4.14 See § 9.18.15 See § 9.14.16 See § 3.4.17 IRC § 4945. The rules concerning taxable expenditures are the subject of Private Foundations ch. 9.18 See § 3.4. 570