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SPECIAL GIFT SITUATIONScourt of appeals decided that the plain language of the statute mandates the markingof contracts to market even when they are contributed to a charitable organization.The appellate court was unwilling to create an “additional exception to whatis an already complex tax code.” 318The final argument formulated for this donor was that persons are able todonate other types of property to charity without realizing capital gains asincome. 319 Although the court of appeals agreed with this view, it stated thatCongress has created a rule that treats futures contracts differently in a variety ofcontexts (apparently including charitable giving). The court said that if Congresswants to create an exception in this setting for charitable gifts—as it did forhedging transactions 320 —it can do so. Concluded this court: “Without such aprovision, we think it an inappropriate arrogation of legislative power for acourt to amend the statute under the guise of judicial construction.” 321§ 9.12 DONORS’ CREATIONSAn individual may make a contribution to a charitable organization of an item ofproperty that was created by the donor, such as a painting or a manuscript. Thecharitable deduction for this type of gift is not based on the fair market value ofthe property; instead, it is confined to the donor’s cost basis in the property.This tax result is occasioned by the rule that requires a reduction in the charitablecontribution deduction, created by a gift of property, by an amount equalto the amount of gain that would not have been long-term capital gain had theproperty been sold by the donor at its fair market value at the time of the contribution.322 The federal tax law excludes from the definition of the term capitalasset a “copyright, a literary, musical, or artistic composition, a letter or memorandum,or similar property,” held by:• an individual “whose personal efforts created such property,”• “in the case of a letter, memorandum, or similar property, a taxpayer [person]for whom such property was prepared or produced,” or• “a taxpayer [person] in whose hands the basis of such property is determined,for purposes of determining gain from a sale or exchange, inwhole or in part by reference to the basis of such property in the handsof” a person described in either of the foregoing two categories. 323Thus, as noted, this charitable deduction is confined to the amount equal to thecost to the donor of the creation of the item of property.318 Id. at 1349.319 This argument prevailed in the district court. Greene v. United States, 864 F. Supp. at 416. In general, see § 4.3.320 IRC § 1256(e).321 Greene v. United States, 79 F.3d at 1357. The court of appeals remanded this case and directed the trial courtto follow its view of the law on the point; the district court held that the donors must mark their commodityfutures contracts to market upon their contribution and recognize as income the long-term capital gain portionof the contracts. Greene v. United States, 975 F. Supp. 273 (S.D.N.Y. 1997), aff’d, 185 F.3d 67 (2d Cir. 1999).322 IRC § 170(e)(1)(A). See § 4.4.323 IRC § 1221(3). 310