We have had recent inquiries concerning giving non-cash contributions. The following should provide a guideline for giving. As always, we suggest you discuss your contributions with your tax advisors.
Charitable Reporting Requirements/Discussion
A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.
Written Acknowledgment Requirement
A donor cannot claim a tax deduction for any single contribution of $250 or more unless the donor obtains a contemporaneous, written acknowledgment of the contribution from the recipient organization. An organization that does not acknowledge a contribution incurs no penalty; but,
without a written acknowledgment, the donor cannot claim the tax deduction. Although it is a donor’s responsibility to obtain a written acknowledgment, an organization can assist a donor by providing a timely, written statement containing the following information:
1. name of organization
2. amount of cash contribution
3. description (but not the value) of non-cash contribution
4. statement that no goods or services were provided by the organization in return for the contribution, if that was the case
5. description and good faith estimate of the value of goods or services, if any, that an organization provided in return for the contribution
6. statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits (described later in this publication), if that was the case
It is not necessary to include either the donor’s social security number or tax identiication number on the acknowledgment.
A separate acknowledgment may be provided for each single contribution of $250 or more, or one acknowledgment, such as an annual summary, may be used to substantiate several single contributions of $250 or more. There are no IRS forms for the acknowledgment. Letters, postcards, or
computer-generated forms with the above information are acceptable. An organization can provide either a paper copy of the acknowledgment to the donor, or an organization can
provide the acknowledgment electronically, such as via an e-mail addressed to the donor. A donor should not attach the acknowledgment to his or her individual income tax return, but must retain it to substantiate the contribution. Separate contributions of less than $250 will not be aggregated. An example of this could be weekly offerings to a donor’s church of less than $250 even though the donor’s
annual total contributions are $250 or more.
Source: http://www.irs.gov/pub/irs-pdf/p1771.pdf
The following non-cash contribution points out the importance of proper paperwork when conveying an asset of notable value:
“The Tax Court has held that a donor is not entitled to an income tax charitable deduction because she failed to establish that she conveyed legal title of donated house to the charitable donee. Consequently the value of the house and costs incurred and related to relocating it may not be deducted.”
Citation: Bridgett Jeanette Bell v. Commissioner; T.C. Summ. Op. 2011-54; No. 8048-08S
Sample Letter:
To: Servias Ministries, Inc.
PO Box 1471
Bethany, OK 73008
From: John and Jane Doe
555 Anywhere Street
Somewhere, OK 73555
Subject: Charitable Gift
Date: xx/xx/xxxx
Dear Sir or Madam,
Please accept the following asset described as our charitable gift/donation to Servias Ministries, Inc.:
(Description)
We purchased the above but want to give it to your Charitable Organization to use at your sole discretion. We understand that if you provide us goods or services that the fair market value of those goods and/or services will be deducted from our contribution amount. We also understand that non-monetary gifts are based on fair market value as of the date of the gift. Please treat this notarized letter as a transfer of title or ownership of the above listed asset.
Best regards,
(signatures)
John and Jane Doe
(notarization)