Celebrity baby photograph donations: A case study in charitable contribution tax planning and research

Abstract

► Charitable contribution tax planning case study. ► Tax implications of potential donations of baby photographs by celebrities. ► Students perform basic tax research and interpret findings. ► Students present solutions for most favorable tax treatment. A recent trend has been the sale for publication in national magazines of the first photographs of celebrities’ babies. It is not unusual for such sales to generate millions of dollars of revenue for these celebrities. Some celebrities have chosen to donate the proceeds from such sales to charity. Despite these charitable intentions, celebrities are not often looking to be charitable to the Federal government. Accordingly, in this case study, your clients, Angie and Bradley, turn to you as their tax advisor for help assessing the tax implications of their potential donations as well as for planning solutions resulting in the most favorable tax treatment for them. By completing this case successfully, you will learn some of the Internal Revenue Code (“IRC”) rules regarding charitable contributions, how to perform basic tax research, and how to interpret your findings in order to provide beneficial tax-planning advice to your clients.