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be used by the donee solely for the care of the ill, the
needy, or infants;
(ii) the property is not transferred by the donee
in exchange for money, other property, or services;
(iii) the taxpayer receives from the donee a
written statement representing that its use and
disposition of the property will be in accordance with
the provisions of clauses (i) and (ii); and
(iv) in the case where the property is subject to
regulation under the Federal Food, Drug, and Cosmetic
Act, as amended, such property must fully satisfy the
applicable requirements of such Act and regulations
promulgated thereunder on the date of transfer and for
one hundred and eighty days prior thereto.
(B) Amount of Reduction.--The reduction under paragraph
(1)(A) for any qualified contribution (as defined in
subparagraph (A)) shall be no greater than the sum of--
(i) one-half of the amount computed under paragraph
(1)(A) (computed without regard to this paragraph), and
(ii) the amount (if any) by which the charitable
contribution deduction under this section for any
qualified contribution (computed by taking into account
the amount determined in clause (i), but without regard
to this clause) exceeds twice the basis of such
property.
Thus, section 170(e)(1) limits the deduction for charitable
contributions of ordinary income property to the basis of the
property. However, section 170(e)(3) allows a limited deduction in
excess of basis for charitable contributions of inventory and other
property to qualified donees. (As previously stated, we have found
(based upon the parties' stipulation) that petitioner's
contributions were qualified contributions under section
170(e)(3)(A)). If the inventory contributed to qualified donees has
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