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§ 4.4 GIFTS OF ORDINARY INCOME PROPERTYmarket value at the time of the charitable gift. Ordinary income is income that isnot long-term capital gain. For these purposes, ordinary income and short-termcapital gain are regarded as the same. Thus, ordinary income property is propertythat, if sold at its fair market value by the donor at the time of its contributionto a charitable organization, would generate a gain that is not long-termcapital gain. 18Examples of ordinary income property are:• Property held by the donor primarily for sale to customers in the ordinarycourse of a trade or business (inventory) 19• A capital asset held for a period of time that is less than the periodrequired to cause the property to become long-term capital gain property(short-term capital gain property)• A work of art created by the donor• A manuscript created by the donor• Letters and memoranda prepared by or for the donor• Stock acquired in a nontaxable transaction which, if sold, would generateordinary income 20• Stock in a collapsible corporation which, if sold, would generate ordinaryincome 21• Stock in certain foreign corporations which, if sold, would generate ordinaryincome 22• Property used in a trade or business, 23 treated as a capital asset, if gainwould have been recognized, upon sale of the property by the donor at itsfair market value at the time of the contribution, as ordinary income byreason of the application of recapture rules 24The term ordinary income property does not include an income interest in respectof which a federal income tax charitable contribution deduction is allowed. 25It is the position of the IRS that, when individuals purchase items with theintent of retaining them for the requisite capital gain holding period 26 and thereafterdonating them to a charitable organization for the purpose of generating acharitable contribution deduction (in an amount greater than the acquisitionprice), the individuals are engaged in a charitable donation venture. 27 The consequenceof this view is that the properties held for contribution purposes are items18 Reg. § 1.170A-4(b)(1).19 See §§ 2.13, 9.3.20 This type of stock, known as section 306 stock, is described in IRC § 306(a). The IRS summarized the tax treatmentof a charitable gift of section 306 stock in Priv. Ltr. Rul. 8930001.21 IRC § 341.22 IRC § 1248.23 IRC § 1231(b).24 IRC § 170(e)(1), last sentence; Reg. § 1.170A–4(c)(4). The recapture rules are the subject of IRC §§ 617(d)(1),1245(a), 1250(a), 1252(a), and 1254(a).25 Reg. § 1.170A-4(b)(1).26 See § 2.16.27 E.g., Pasqualini v. Commissioner, 103 T.C. 1, 5 (1994). 129