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§ 21.3 REPORTING REQUIREMENTSalso contains a favorable application of the doctrine of substantial compliancein this context. 118(f) C Corporation RulesA separate set of rules applies appraisal requirements to regular corporations(corporations other than those referenced above, termed C corporations). Theserules, in general, require such corporations to obtain a qualified independentappraisal to validly claim a charitable contribution deduction for gifts of mostnonmoney property having a value in excess of $5,000. 119These rules, when proposed, would have applied when a regular corporationmade a charitable contribution of property that constitutes part of its inventory.Gifts of this nature are often the subject of a special deduction provision. 120In response to complaints of burdens of overregulation by the corporate givingcommunity, the IRS subsequently announced 121 a rule exempting certain corporationsfrom the need to obtain appraisals for gifts of inventory. 122 These corporations,instead, are required to include summary information in their annualtax returns, such as a description of the inventory contributed and the valuationmethod used (such as retail pricing). This information is embodied in a partiallycompleted appraisal summary.§ 21.3 REPORTING REQUIREMENTSFederal law requires the filing of an information return by certain charitabledonees that make certain dispositions of contributed property (charitable deductionproperty). 123 A charitable donee that sells, exchanges, consumes, or otherwise118 A subsequent opinion also followed the doctrine of substantial compliance in the charitable giving/substantiationcontext. In the case, the donors failed to maintain adequate records as to the cost basis of the donated property.See § 21.1(a), text accompanied by note 24. The court found, however, that there was reasonable cause forthis failure, that the information was irrelevant to the calculation of the charitable contribution deduction, andthus that the substantiation requirements were substantially complied with. Fair v. Commissioner, 66 T.C.M.(CCH) 460 (1993). Nonetheless, this doctrine is inapplicable when the donor did not substantially comply withthe requirements. See, e.g., Hewitt v. Commissioner, 109 T.C. 258, 264 (1997) (court found that donors furnished“practically none” of the required information); D’Arcangelo v. Commissioner, 68 T.C.M. (CCH) 1223(1994) (donor failed to obtain a qualified appraisal, used a nonqualified appraiser, and did not submit a fullycompleted appraisal summary).119 Reg. § 1.170A-13(c)(2)(ii).120 IRC § 170(e)(3). See § 9.3.121 IR-88-137.122 The problem facing the charitable community in this regard was the fear that the more burdensome the regulatoryprocess required in conjunction with gifts of inventory, the greater the likelihood that corporations would notmake this type of gift. Also, the price set by these corporations for the items they manufacture is based on theirassessment of what the market will accept. In part, the price is determined by the cost of developing and marketingthe items; the price is also partially a function of what the consuming public is willing to pay—the classiclaw definition of the fair market value of an item of property. See § 10.1. An independent appraiser cannot provideany better determination of value than the contributing corporation. Further, an appraisal of inventory giftsis usually a pointless act. At best, the deduction will be an amount no greater than twice the corporation’s costbasis in the property, so the fair market value of the property is likely to be irrelevant.Section 6281 of the Technical and Miscellaneous Revenue Act of 1988 authorized the Department of theTreasury to promulgate regulations allowing regular corporations to provide, in the case of charitable gifts ofinventory, less detailed substantiation than that required for other corporations. The Treasury Department hadalready agreed to the above-described compromise, however, by the time this legislation was finalized.123 IRC § 6050L. 601