Sign up to receive Brian's FREE monthly email newsletter.  Your Email: Click SEND to FORWARD this page to others [ Send Button ]
New Stricter Tax Rules on Gift-In-Kind Donations to Churches & Ministries
 

 "MAXIMUM Generosity" -  21st Century Biblical Generosity Resources and Training ( www.kluth.org )

Home

Biblical Insights for Preaching & Teaching

 Quips, Quotes, Statistics & Stories

 Leadership Helps  

 Building Fund Projects

Financial Counseling

 Products & Copyright Reprints

Audio Messages

Speaking Ministry

BIBLICAL GENEROSITY RESOURCES FOR: Pastors   Denominations  Church Ldrs  Individuals  Fundraisers   Mags/Webs/Media

New Stricter Tax Rules on Gift-In-Kind Donations to Churches & Ministries

Source: MoneyNews.com 7/01

Website Home Page

Info about Brian Kluth

Resources ON:
> Biblical Insights
>
Preaching & Teaching
>
Quips & Quotes
>
Statistics
>
Humor
>
Stories & Illustrations
>
Cartoons
>
Leadership Planning     > Building Projects
>
40-Day Study
>
Audio Messages
>
PowerPoint Slides
>
Ministry Fundraising    > Hotlinks - Referrals

Resources FOR:
> Pastors
>
Church Leaders
>
Church Committees
>
Individuals
>
Denominations
>
Mags/Media/Websites
>
Parachurch Ministries   > CEO's/Fundraisers

Speaking:
> Brian's Bio
>
Endorsements
>
Speaking Experience
>
Leadership Seminars
>
Financial Messages    > Sunday Sermons
>
Audio & Handouts
>
Denominations
>
Speaking Schedule     > Spkg Request Form

Contact Info:
MAXIMUM Generosity
Brian Kluth
5201 Pinon Valley
Colo Springs, CO 80919
Cell: 719-930-4000   Email: bk@kluth.org               Web: www.kluth.org

Click here to send this webpage to others

By Hugh Sprunt

Each year millions of Americans who itemize their deductions on Schedule A of Form 1040 deduct the fair market value of items they donate to charity (Line 16 on the 2000 Schedule A). A recent tax court decision shows that many taxpayers, not to mention the charities that provide receipts to their donors, need to be more careful when producing the supporting documentation taxpayers are required to maintain in their files in case of audit by the IRS.

Until recently, from the IRS perspective, the biggest controversy surrounding non-cash contributions was the tendency of taxpayers in the last few years to value a donated auto by using the car's full "blue book" value even though the particular vehicle had abnormally high mileage for its model year, was in need of significant body or engine work, or had other flaws meriting a significant discount from the published "blue book" value (fair market value).

However, a recent 2001 tax court decision (T.C. Memorandum Decision 2001-45) looks like it will provide the IRS with a powerful weapon in its battle to insure that non-cash charitable contributions in general are properly documented by taxpayers before such deductions are allowed on a tax return.

Although it appears reasonable that the court in this particular case, unfavorably impressed by taxpayer's documentary and other shortcomings regarding other types of deductions under review, supported a strict standard that many taxpayers today could NOT satisfy if they had to prove-up the value reported on their tax returns for non-cash charitable contributions, all taxpayers making non-cash donations of property to charity should beware.

Before turning to the specifics of this recent tax court case and the hard line endorsed by the court that requires taxpayers to judge the sufficiency of the receipts provided by charities, Part I and Part II of this article will cover by way of background the general IRS rules for itemized non-cash charitable contribution deductions on Schedule A.

Leaving aside for a moment the additional documentation that a taxpayer must provide by completing Form 8283, Section A, Part II, and Section B for items (or groups of similar items) for which a deduction(s) of more than $5,000 is being claimed, or for items donated subject to conditions, or for property in which less than the entire ownership interest is being donated, what sort of documentation must a taxpayer have available to support a deduction for non-cash charitable contributions on Schedule A?

If the deduction for an amount donated in a single donation (for example, a single "run" to Goodwill Industries collection center) is less than $250, taxpayer should obtain a receipt containing the charity's name as well as the date, location and description of the donation... OR, in the absence of such a receipt, must have his or her own "reliable written records" substantiating the donation.

A receipt is specifically NOT required in this case if the contribution is made under circumstances in which it is impractical to obtain one (e.g., when donated property is deposited at a charity's unattended drop site). Note that the fair market value need not be stated by the charity on the receipt even if it provides a receipt.

The alternative "reliable written records" requirement tends to be met if the taxpayer's "writing" is contemporaneous with the donation (dated taxpayer list of items donated and their value), or consists of writings of a regular nature by the taxpayer (such as daily diary entries that provide the information in question) or, in the case of "small" contributions, the existence of written or any other evidence from the donee organizations that does not rise to the level of a receipt (such as a donor's lapel pin or similar item).

This discussion of the IRS rules for obtaining a proper deduction for non-cash charitable contributions via an itemized deduction on Schedule A of Form 1040 will continue in next week's Part II. In the two weeks after that, Parts III & IV will conclude this article by covering the recent 2001 hardline interpretation by the tax court in the area of non-cash charitable contributions and describing what taxpayers can do to protect themselves from having their non-cash charitable deductions disallowed.

CAUTION: This article is intended to provide accurate information regarding the subject matters covered. However, it is distributed with the understanding that neither the author nor the publisher is engaged in rendering legal, tax, financial, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought in the context of the individual's particular situation and general circumstances. Since each individual's overall tax situation is unique, a tax strategy that turns out to be appropriate for one individual is often totally unsuitable for someone else. No significant transaction with potential tax ramifications should be undertaken without consulting one's individual tax advisor about its specific application. Taxing authorities in states that have an income tax enforce statutes whose rules and requirements often differ significantly from those of the Federal government's Internal Revenue!

**************************************************************************

For all the latest financial news, go to: http://www.MoneyNews.com...and keep checking http://www.NewsMax.com for all the latest news and commentary.

    

Click here to FORWARD this page to others

ABOUT THE AUTHOR: Brian Kluth is a national and international speaker and writer on Biblical generosity and financial matters.  He is also a church pastor and the founder of MAXIMUM Generosity, a public ministry dedicated to advancing Biblical generosity through inspirational preaching, leadership training seminars, writing, resources and the media.  Brianís written materials have been distributed to more than 350,000 Christian leaders in more than 100 countries .For additional materials or to contact Brian, email: bk@kluth.org or visit: www.kluth.org

© www.kluth.org.  Copyright reprint permission for non-commercial purposes can be purchased for $20 to photocopy, fax, email or print this materials for 1-25 people, $50 for distribution to 26-500 people, $75 for 501-999 people, and $100 for distribution to 1000 or more.   To purchase the required reprint permission, go to the products page on this website (www.kluth.org), call 1-888-443-7407, or email: bk@kluth.org     

 

 "MAXIMUM Generosity" -  21st Century Biblical Generosity Resources and Training ( www.kluth.org )

Home

Biblical Insights for Preaching & Teaching

 Quips, Quotes, Statistics & Stories

 Leadership Helps  

 Building Fund Projects

Financial Counseling

 Products & Copyright Reprints

Audio Messages

Speaking Ministry

BIBLICAL GENEROSITY RESOURCES FOR: Pastors   Denominations  Church Ldrs  Individuals  Fundraisers   Mags/Webs/Media

(c)Copyrighted.  For permission to reprint Brian Kluth's matl for personal, committee, church or ministry use, click here or call 719-930-4000

Hit Counter