“Donee Reporting of Gift on Amended Form 990 Insufficient; Contemporaneous Written Acknowledgment Required (15 West 17th Street LLC, TC) (Dec. 27, 2016)
A partnership’s $64-million deduction for the contribution of a façade easement to a historic trust was properly disallowed because the partnership did not have a contemporaneous written acknowledgment (CWA) from the donee organization as required by Code Sec. 170(f)(8)(A). The letter sent by the donee organization to the taxpayer did not qualify as a CWA because it failed to state whether the donee supplied the donor with any goods or services in consideration for the gift.”
It seems like more charitable deductions are lost because of one sentence then for any other reason. The sentence: “No goods or services were given in exchange for this donation.” We continue to encounter otherwise knowledgeable and reputable organizations who forget that this sentence is absolutely critical to the donor’s deduction. We will review some of the basic rules for donations that cause the most problem.
For gifts of $250 or more, and acknowledgment must contain certain information. And acknowledgment must contain:
- The name of the organization
- The amount of the cash contribution
- The description but not value of a non-cash contribution
- A statement there no goods or services were provided, if that is correct.
- A statement that goods or services provided were religious intangible benefits only, if that is the case
- Is the organization providing goods or services, a good faith estimate of the value of benefits received by the donor?
In addition to the acknowledgment, the taxpayer must keep a copy of the check or other written contemporaneous receipt for the contribution.
For quid pro quo contributions, and organization must provide a written disclosure to a donor who makes a payment of more than $75. The statement must state that the donor’s contribution is limited, gives an estimate of the value of the benefit, is given to the donor when the contribution is solicited or received. There are certain exceptions to the quid pro quo rules for certain benefits of $75 or less.
A gift is considered complete when the donor generally relinquishes control over the asset that is being donated. For a completed gift, there must be intense, delivery and acceptance.
A check is considered given on the date of delivery as long as it clears in due course. If sent by the post office, it is considered delivered on the day of the postmark. If sent by Federal Express or other third-party delivery agent, it’s considered delivered on the date received.
A credit card charge is considered delivered on the date the charges made regardless of when it is actually paid.
Stock certificates are considered delivered on the date of the postmark if delivered by the post office or date of receipt if done by Federal Express or other third-party delivery service. If a stock certificate is in a street name, meaning a brokerage account, it is considered delivered on the data ownership is transferred out the donors count. If there is a transfer agent involved the certificate or the shares are considered delivered on the day, the transfer agent changes its books and records.
Do not attempt to value gifts other than cash. The date of the acknowledgement is actually tricky. For stocks, state only that you received “x shares of ABC corporation”.
We will review additional problem areas in our next post. We strongly recommend that you carefully review your gift acceptance and documentation policies to avoid problems with your donors.