The IRS on Monday will release temporary (T.D. 9206) and proposed (REG-158138-04) regulations providing guidance to donees of qualified intellectual property contributions.  The effective date of the regulations is Monday, and they apply to donees receiving net income from qualified intellectual property contributions made after June 3, 2004.  The IRS also will issue Notice 2005-41, advising donors how to qualify for additional deductions for contributions of qualified intellectual property.

Section 882 of the American Jobs Creation Act of 2004 amended § 170(m)(2), (8) & (9).  A donor’s initial charitable contribution deduction for contributions of qualified intellectual property is limited to the lesser of the fmv of, or the donor’s adjusted basis in, the qualified intellectual property.  However, the donor is allowed to deduct certain additional amounts based on a percentage of the qualified donee income received by or accrued to the donee with respect to the qualified intellectual property. To qualify for the additional deductions, the donor must notify the donee at the time of the contribution of the donor’s intention to take the additional deductions.  The Act further amended § 6050L to require the donee to file an information return with respect to each qualified intellectual property contribution.