IRS Vows Crackdown on Improper Deductions for IP Transfers

Law360, New York (December 22, 2003, 12:00 AM EST) -- The Internal Revenue Service put taxpayers on notice Monday that it would begin cracking down on improper deductions for donating patents and other intellectual properties to charity.

"We’re seeing an increasing number of donations that don’t pass the smell test. Donations that are overly inflated or made with strings attached are going to receive increased scrutiny,” said IRS Commissioner Mark Everson.

The IRS listed four examples of questionable charitable contributions of intellectual property that have caught the agency’s attention:

- the transfer of a nondeductible partial...
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