What Special Limits Apply to the Contribution of Appreciated Short Term Capital Gain Property ?
In the case of a contribution of tangible personal property no deduction is allowed for the amount of unrealized gain that would have been long term capital gain if the property had been sold for its fair market value, if the use by the donee is unrelated to the purpose or function constituting the basis for its exemption under section 501.[46] It stands to reason that in some cases a donor would be better off selling the property, paying the capital gains, and donating (and taking an income tax deduction for) the amount left over. The related use rule is discussed in more detail below.
