When a donor provides a gift to a charity that is conditioned upon the charity performing some act or a certain event occurring, a deduction for the donation is only allowed once that event has taken place. There is an exception to this rule – the deduction is allowed in the transfer year if the possibility that the charitable transfer will not become effective is so remote as to be negligible [Reg 1.170A-1(e)]. A recent Tax Court decision illustrates the definition of remoteness (Graev, 140 TC No 17 (2013). In that case, the charity held that, as they had received a number of contributions of the type in question and had never had to return any of them, the chance of having to return this particular contribution met the negligible test.
The IRS disagreed and the Tax Court upheld the IRS in the case.