If a donor transfers an income interest in property to a charity and retains the underlying property or transfers such property and retains the income interest, the donor does not receive any income tax deduction unless the interest that goes to the charity is in the form of a qualified remainder interest in a charitable remainder trust or a qualifying income interest in a charitable lead trust.

In PLR 201129033, the donor owned both voting and non-voting shares of stock of a corporation. He wanted to give a portion of his non-voting shares to a charity and asked the IRS for a ruling that the transfer of the non-voting shares would not be considered a prohibited transfer of a partial interest in property. The IRS ruled in favor of the taxpayer, finding that the voting shares and non-voting shares constituted separate and distinct property interests, rather than being fractional parts of a single property interest. The donor did arrange for the corporation to agree to pay an annual dividend on the non-voting shares so that the charity would receive some clear economic benefit. This may have assisted the taxpayer in getting the favorable ruling.

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