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§ 3.1 MEANING OF GIFT• Payment made pursuant to a plea-bargain agreement, which was found toamount to consideration enabling the “donor” to escape incarceration 111In some circumstances, a benefit to a donor will not cause loss of a charitablecontribution deduction but instead will cause taxation of gain in addition to atax deduction. This involves the step transaction doctrine, which is discussed elsewhere.112 Nonetheless, it is appropriate to illustrate the point here. In one case,an individual contributed appreciated securities to a charitable organizationwith the understanding that the charity would liquidate the stock and purchasehis yacht with the sales proceeds. The charity completed the transaction; thedonor was found to be taxable on the gain realized as the result of liquidation ofthe stock. 113 The appellate court wrote that “where there is an understandingthat a contribution of appreciated property will be utilized by the donee charityfor the purpose of purchasing an asset of the contributor, the transaction will beviewed as a matter of tax law as a contribution of the asset—at whatever its thenvalue is—with the charity acting as a conduit of the proceeds from the sale of thestock.” 114 The court added: “This makes the taxpayer/putative-donor taxable onthe gain of the stock though entitled to deduct the value of the asset given, whateverthat value in fact is.” 115(c) Incidental BenefitsWhen a benefit to a donor is incidental, the benefit will not defeat the charitablededuction. The following are several instances of application of that rule.• A tornado destroyed several homes in a town. The local chapter of theAmerican National Red Cross provided food and temporary shelter to anindividual whose home was destroyed. The individual, motivated bygratitude, made a (deductible) contribution to the chapter. 116• An individual owned a home in an area served by a volunteer fire department.Neither state nor local taxes were used to support the fire department.The individual made a (deductible) contribution to the volunteerdepartment’s annual fund drive. 117• An individual’s daughter was a member of a local unit of the Girl Scoutsof America. The individual made a (deductible) contribution to the GirlScouts of America. 118111 Ruddel v. Commissioner, 71 T.C.M. (CCH) 2419 (1996). See also Lombardo v. Commissioner, 50 T.C.M.(CCH) 1374 (1985).These matters can operate in reverse. In one instance, an individual attempted to deduct payments made totwo charities as business expenses; the court held that they were not business expenses but were charitablegifts—then disallowed the charitable deduction because the individual did not itemize deductions. Irwin v.Commissioner, 72 T.C.M. (CCH) 1148 (1996).112 See § 4.8.113 Blake v. Commissioner, 697 F.2d 473 (2d Cir. 1982), aff’g 42 T.C.M. (CCH) 1336 (1981).114 Id., 697 F.2d at 480.115 Id.116 Rev. Rul. 80-77, 1980-1 C.B. 56.117 Id.118 Id. 73