Another area of abuse involves the misuse of Family Limited Partnerships (FLPs) in charitable giving.
Charitable Family Limited Partnerships
The strategy involves placing assets into an FLP and donating a minority interest to a charity. The donor claims a large deduction based on the appraised value.
The Trap
If the donor retains too much control or if the charity never actually receives any benefit (income or assets), the IRS may view the entire structure as a sham. The "minority discount" used to value the gift is also a frequent target of audits. If the FLP is used primarily to avoid estate taxes without genuine charitable intent, it will not withstand scrutiny.