Today, the Treasury Department and the IRS released proposed regulations providing rules on the availability of charitable contribution deductions when the taxpayer receives or expects to receive a corresponding state or local tax credit. Under the proposed regulations, taxpayers who make payments or transfer property to entities eligible to receive tax deductible contributions must reduce their charitable deductions by the amount of any state or local tax credit the taxpayers receive or expect to receive. The preamble to the proposed regulations states that “the Treasury Department and the IRS believe that when a taxpayer receives or expects to receive a state or local tax credit in return for a payment or transfer to an entity listed in section 170(c), the receipt of this tax benefit constitutes a quid pro quo that may preclude a full deduction under section 170(a).”