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§ 4.2 GIFTS OF PROPERTY IN GENERALthe property is viewed by some as an unwarranted benefit to donors and a violationof tax policy. Indeed, in some instances, recognition of gain is required. 8Likewise, a loss is not recognized when an item of property is contributed toa charity. In this circumstance, the donor should sell the property, experience theloss, and contribute the sales proceeds to charity. (By contrast, the donor ofappreciated property is usually best advised to contribute the property to a charitableorganization, rather than sell the property and donate the after-tax proceedsto the charity.)The donor’s ability to take a charitable deduction for a contribution of property,based upon the fair market value of the property, depends on several factors.Chief among these are the:• Nature of the property contributed• Tax classification of the charitable donee• Use to which the charitable donee puts the propertyAs to the first of these factors, the federal tax law categorizes items of propertyas follows:• Long-term capital gain property• Short-term capital gain property• Ordinary income propertyAs to the second of these factors, the federal tax law classifies entities as towhich deductible charitable contributions can be made as follows:• Public charitable organizations• Private foundations• Governmental bodies• Other types of tax-exempt organizations (such as veterans’ organizations) 9As to the third of these factors, the federal tax law divides the use to which acharitable organization puts donated property as follows:• A use that is related to the donee organization’s tax-exempt purpose(related use)• A use that is not related to the donee organization’s tax-exempt purpose(unrelated use) 10The extent to which a contribution of property is deductible for federalincome tax purposes is dependent upon the interplay of these factors, plus:• the value of the property, 118 The most common example of this is the rule in connection with bargain sales (see § 9.16). Another instancewould be gifts of property that is subject to debt (see § 9.17).9 See § 3.4(b).10 See § 3.5.11 See § 10.1. 127