The Chip Board
Custom Search
   


The Chip Board Archive 21

Deductibility rules per IRS

Just to clarify the tax rules for charitable deductions when you receive something of value in return --

Allan, you wrote:
"Well, I guess it is all how you look at it. I work for a public television station. We give thank-you gifts for people that donate to our station. The people are not buying the items, they are getting a thank-you gift for donating to us. This is the way Public Television has gotten around tax laws. It is completely legal. But let's face it, people are buying the items that they can't get any other way."

It's not quite that simple. If your public TV station offers a book or DVD, etc. in return for a pledge of money, only the excess value of the pledge (above the fair market value of the book or DVD) is deductible as a charity / non-profit contribution. See excerpt from IRS Publication 526 below. I'm not saying that people don't ignore this, but it IS the law. (Generally, a de minimis benefit can be ignored.)

Contributions From Which You Benefit

If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later.

If you pay more than fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the value of the item can be a charitable contribution. For the excess amount to qualify, you must pay it with the intent to make a charitable contribution.

Example 1.

You pay $65 for a ticket to a dinner-dance at a church. All the proceeds of the function go to the church. The ticket to the dinner-dance has a fair market value of $25. When you buy your ticket, you know that its value is less than your payment. To figure the amount of your charitable contribution, you subtract the value of the benefit you receive ($25) from your total payment ($65). You can deduct $40 as a charitable contribution to the church.

Example 2.

At a fund-raising auction conducted by a charity, you pay $600 for a week's stay at a beach house. The amount you pay is no more than the fair rental value. You have not made a deductible charitable contribution.

Athletic events. If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution.
If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. In that case, subtract the price of the tickets from your payment. 80% of the remaining amount is a charitable contribution.
Example 1.

You pay $300 a year for membership in an athletic scholarship program maintained by a university (a qualified organization). The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. You can deduct $240 (80% of $300) as a charitable contribution.

Example 2.

The facts are the same as in Example 1 except that your $300 payment included the purchase of one season ticket for the stated ticket price of $120. You must subtract the usual price of a ticket ($120) from your $300 payment. The result is $180. Your deductible charitable contribution is $144 (80% of $180).

Charity benefit events. If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive.
If there is an established charge for the event, that charge is the value of your benefit. If there is no established charge, your contribution is that part of your payment that is more than the reasonable value of the right to attend the event. Whether you use the tickets or other privileges has no effect on the amount you can deduct. However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket.

Messages In This Thread

My Paypal Opinion - This is going to be unpopular
Re: My Paypal Opinion - This is going to be unpopu
Re: My Paypal Opinion - This is going to be unpopu
Nope - PayPal Gift still free grin
Fees only if a CC is used
1Interesting view, and after
Re: My Paypal Opinion - This is going to be unpopu
If It Is Illegal, they should REMOVE it as option!
Its not a question about it being legal or illegal
Re: Its not a question about it being legal or ill
Re: Its not a question about it being legal or ill
Great Answer!!! grin grin grin
Zeb, its on there for an intended purpose
Its "against the rules" not illegal
Re: Its "against the rules" not illegal
Doug, this is my opinion...
Jim, I dont think that the BOD needs an official
Thanks, Doug. Seemed a bit ridiculous for the
Not "ridiculous" at all since Doug brought up club
Did I say for him not to post it?
Still no fees if PERSONAL transaction
Re: Still no fees if PERSONAL transaction
Just use "Personal Payment Due"
Re: Just use "Personal Payment Due"
Re: My Paypal Opinion - This is going to be unpopu
Re: Derek
Re: My Paypal Opinion - This is going to be unpopu
Use a Check
I agree; let's keep it legal. Especially on TCB...
I agree. Wasn't as unpopular as you thought! vbg
A Good Post
Excellent Post, Doug and I Agree
Kinda' related subject ...
For a minute I thought you were going to mention ~
Re: For a minute I thought you were going to menti
Bribery.....
I'm Checking The code of Ethics Now vbg
Re: Bribery.....
Re: Bribery.....
Re: My Paypal Opinion - This is going to be unpopu
Allan, by sending a Paypal payment
Re: Allan, by sending a Paypal payment
Deductibility rules per IRS
Re: Deductibility rules per IRS
Allan, I do understand what your saying and see
Re: My Paypal Opinion - This is going to be unpopu
Unpopular, apparently not, BUT...
Sunday, Good to gear from you.
Don't Use Paypal...
Sellers: just add .30 + 3% to your total
Re: Sellers: just add .30 + 3% to your total
I dont understand what the fuss is about
Re: My Paypal Opinion - This is going to be unpopu
Speaking of taxes ....
Re: Speaking of taxes ....
Re: Speaking of taxes ....
Re: My Paypal Opinion - This is going to be unpopu
AH, but they do pay interest
Interesting Don ... TY! grin
Re: I Get Interest On my Paypal Balance
Today for many flofs the ends justify the means,
Have you considered revising your opinion?
Nope, Same Opinion. It is up to each and
Re: Nope, Same Opinion. It is up to each and

Copyright 2022 David Spragg