The pandemic has put many people and businesses in need of help. The federal government has responded by enacting Economic Impact Payments, Paycheck Protection Program loans, tax credits, and extended deadlines. And individuals and companies have responded to this need through various charitable efforts. From a tax perspective, there are new rules for 2020 to incentivize this giving.

Increased Cash Contribution Limits

The Coronavirus Aid, Relief, and Economic Security (CARES) Act (PL 116-136), which was signed into law on March 27, 2020, changed the rules for cash contributions for both individuals and C corporations that are made to public charities after December 31, 2019. The enhanced deduction limits do not require that donations be made for COVID-19-related purposes.


For 2020, three key changes apply to individuals. First, individuals who claim the standard deduction can take a write-off for donations up to $300. While the IRS has not provided guidance as yet on how this deduction will be handled on the tax return, it is likely to be taken as a mere increase to the standard deduction amount.

Second, all individuals who itemize usually would have been limited to 60% of adjusted gross income in deducting cash donations this year. Under a law change for 2020, the limit is 100%, this higher limit, however, does not apply to donations to private foundations or donor advised funds. The Further Consolidated Appropriations Act of 2020 had allowed a similar tax break for donations specifically related to certain disaster relief through February 18, 2020, but this restricted rule has been supplanted by the CARES Act rule.

Third, the limit on deducting donations of food inventory by taxpayers other than C corporations has increased. Usually, donations of food inventory are limited to 15% of net income from the taxpayer’s pass-through businesses. For 2020, this limit has been increased to 25%. The items must be “apparently wholesome food,” which means the items meet government-imposed quality and labeling standards [IRC section 170(e)(3)].

C corporations.

Usually, contributions are capped at 10% of taxable income; however, donations in 2020 are deductible up to 25% of taxable income.

For donations of food inventory, the deduction usually is equal to the lesser of 1) basis plus one-half of the item’s appreciation (i.e., basis plus one-half of fair market value in excess of basis) or 2) two times basis. For 2020, however, the deduction is subject to the 25%-of-taxable income limit.


Contributions by individuals in excess of the limitation can be carried forward for up to five years. (This rule has not been changed.) The carryforward is amounts in excess of the “contribution base,” which for individuals is adjusted gross income without regard to any net operating loss carryback in excess of the deduction for other charitable contributions (e.g., donations of appreciated securities).

Contributions by C corporations in excess of the applicable limit are also subject to a five-year carryforward.

Conservation Easements

Alternative types of charitable contributions continue to be made despite COVID-19. Taxpayers who donate an interest in real property for conservation purposes may claim an enhanced charitable contribution deduction. This includes preserving land areas for outdoor recreation by, or for the education of, the general public; protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem; preserving open space, including farmland and forest land, if it yields a significant public benefit; or preserving a historically important land area or a certified historic structure. Usually, such donation is a restriction on the use of real property granted in perpetuity. While the rules seem straightforward, two general problems arise: 1) whether the rules for deductibility have been met (e.g., whether the grant is in perpetuity) and 2) whether the donation is part of an abusive syndicated conservation easement.

There is considerable litigation on whether a donation meets the requirements for qualifying as a conservation easement. In one recent case, an LLC donated a conservation easement in which the deed provided that if the conservation restriction were extinguished in the future, the donee would receive a share of the proceeds equal to the fair market value of the easement on the date the contribution was made. The IRS disallowed the deduction on the grounds that it violated the rule of perpetuity [Treasury Regulations section 1.170A-14(g)(6)]. After the LLC challenged the promulgation of the regulations, the Tax Court held that the regulations are valid [Oakbrook Land Holdings, LLC, 154 TC No. 10 (2020)]. In a companion case, the Tax Court looked at the facts and held that the deed violated the “protected in perpetuity” requirement, disallowing the deduction (Oakbrook Land Holdings, LLC, TC Memo 2020-54). A similar conclusion was reached in another recent decision (Woodland Property Holdings, LLC, TC Memo 2020-55).

Taxpayers do not always lose when their deduction for a donation of a conservation easement is challenged by the IRS. Recently, the 11th Circuit reversed the Tax Court ruling to allow a deduction for an easement that included a golf course (Retreat Golf Founders, LLC, CA-11, 5/13/20, rev’g TC Memo 2018-146). If the donation had not included the golf course, it clearly would have qualified—but the course would not automatically have disqualified the deduction as long as the easement included a habitat for rare, endangered, or threatened species of animal, fish, or plants, or contributed to the ecological viability of the adjacent national forest. The court concluded that it did and allowed the deduction, although the case was remanded to the Tax Court to determine the amount of the deduction.

The second issue for easements referenced above relates to the IRS’s vigilance to find abusive syndicates that essentially sell conservation easement deductions that greatly exceed taxpayers’ investments. In 2017, the IRS designated certain types of syndicated conservation easements as listed transactions (Notice 2017-10). Last year, the IRS announced increased enforcement (IR-2019-182, 11/12/19). The IRS has a Conservation Easement Audit Techniques Guide ( showing examiners what to look for in audits of returns claiming deductions for donations of conservation easements.

In light of the Economic Impact Payments to individuals, the Taxpayer Advocate Service and the IRS have warned taxpayers about possible scams designed to obtain this money or personal information, often through solicitation of charitable contributions

Scam Alerts

In light of the Economic Impact Payments to individuals, the Taxpayer Advocate Service and the IRS have warned taxpayers about possible scams designed to obtain this money or personal information, often through solicitations of charitable contributions (April 2, 2020, TAS Tax News; IR-2020-64, 2/2/20). Donors are encouraged to check the validity of charitable organizations through the IRS tax-exempt organization search tool (

While the IRS did not release a list of “dirty dozen” tax scams this year, there were two scams on the 2019 list. One was falsely padding deductions on returns (IR-2019-36);the other was fake charities (IR-2019-36); In the latter, groups masquerade as charitable organizations to obtain contributions from unsuspecting donors.

More on Charitable Contributions

Other than the changes from the CARES Act, the basic tax rules for charitable contribution deductions continue to apply. This means that donations directly to an individual, no matter how needy, are not deductible. More information about charitable contribution deductions can be found in IRS Publication 926 (, although the posted publication does not reflect tax law changes for 2020. For a list of all charitable contribution cases since 2012, see IRS Legal Memorandum 202020002.

Sidney Kess, JD, LLM, CPA is of counsel to Kostelanetz & Fink and a senior consultant to Citrin Cooperman & Co., LLP. He is a member of the NYSSCPA Hall of Fame and was awarded the Society’s Outstanding CPA in Education Award in May 2015. He is also a member of The CPA Journal Editorial Advisory Board. Reprinted with permission from the May 22, 2020 edition of the New York Law Journal © 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited; contact 877-257-3382 or