May 30, 2012

Charitable Contribution Receipts

Charitable Contribution: "But I made the contribution and have a receipt"

The David P. Durden, et ux. v. Commisioner, TC Memo 2012-140

Taxpayers claimed a charitable contribution deduction primarily made up of checks written to their church for amounts larger than $250. The church acknowledged its receipt of the contributions on a year-end statement to the taxpayers, but there was no language concerning whether any goods or services were provided in consideration for the contributions, as required under IRC Sec. 170(f)(8) . The Tax Court disallowed the deduction and reminded taxpayers that the terms of the statute require an affirmative statement that no goods or services were received.

The taxpayers conceded they did not "strictly" comply with the requirements, but argued they "substantially" complied.

The Durden’s deducted $25,171 as schedule A, Itemized deductions on their 2007 jointly filed income tax return for charitable contributions. Most of the contributions were made by checks to their church larger than $250.

IRC section 170(f)(8) is clear regarding what must be on the receipt from the charitable organization regarding the fact that "no goods or services were provided in consideration for the contribution".

For any contribution of $250 or more the taxpayer must substantiate the contribution by a contemporaneous written acknowledgement of the contribution by the donee organization that includes the following:
  1. The amount of cash and a description (but not value) of any property other than cash contributed.
  2. Whether the donee organization provided any goods or services in consideration, in whole or in part, for any cash or property.
  3. A description and good faith estimate of the value of any goods or services received by the donor or if such goods and services consist solely of intangible religious benefit.
This statement is considered "contemporaneous" if you receive the statement on or before the earlier of:
  1. The date on which you file a tax return for the year in which the contribution was made, or
  2. The due date (including extensions) for filing such return.
Check your religious charitable receipts and look for this language:

"You did not receive any goods or services in connection with these contributions other than intangible religious benefits".

1 comment:

  1. Excellent article. It should stimulate ones grey matter concerning all deductions and receipts; the fact that they should be dated, accurate, state the item or service, and be appropriate for the individual or business deduction.

    Imagine, 18 words separated the Durden family from legitimately having a $25,171 deduction. That's $1,398.39 per word. I feel bad for them.

    So this now begs the question, should all tax prepares now request to see ALL statements from all charitable giving exceeding $250?


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