Special rules for fractional gifts
(1) Denial of deduction in certain cases
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(A) In general No deduction shall be allowed for a contribution of an undivided portion of a taxpayer’s entire interest in tangible personal property unless all interests in the property are held immediately before such contribution by— (i) the taxpayer, or (ii) the taxpayer and the donee.
(B) Exceptions The Secretary may, by regulation, provide for exceptions to subparagraph (A) in cases where all persons who hold an interest in the property make proportional contributions of an undivided portion of the entire interest held by such persons.
In the case of any additional contribution, the fair market value of such contribution shall be determined by using the lesser of—
(A) the fair market value of the property at the time of the initial fractional contribution, or
(B) the fair market value of the property at the time of the additional contribution.
(A) Recapture The Secretary shall provide for the recapture of the amount of any deduction allowed under this section (plus interest) with respect to any contribution of an undivided portion of a taxpayer’s entire interest in tangible personal property— (i) in any case in which the donor does not contribute all of the remaining interests in such property to the donee (or, if such donee is no longer in existence, to any person described in section 170(c)) on or before the earlier of— (I) the date that is 10 years after the date of the initial fractional contribution, or (II) the date of the death of the donor, and (ii) in any case in which the donee has not, during the period beginning on the date of the initial fractional contribution and ending on the date described in clause (i)— (I) had substantial physical possession of the property, and (II) used the property in a use which is related to a purpose or function constituting the basis for the organizations’ exemption under section 501.
(B) Addition to tax The tax imposed under this chapter for any taxable year for which there is a recapture under subparagraph (A) shall be increased by 10 percent of the amount so recaptured.
For purposes of this subsection—
(A) Additional contribution The term “additional contribution” means any charitable contribution by the taxpayer of any interest in property with respect to which the taxpayer has previously made an initial fractional contribution.
(B) Initial fractional contribution The term “initial fractional contribution” means, with respect to any taxpayer, the first charitable contribution of an undivided portion of the taxpayer’s entire interest in any tangible personal property.