As we do each year about this time, we will discuss various rules about substantiating a donor gift. There is still a surprising amount of litigation about proper documentation. Many organizations are not careful about following the rules, with the result that they have donors who lose their deduction.
For gifts of $250 or more, an acknowledgment must contain certain information. Ad 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
- If 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 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 tricky. For stocks, state only that you received “x shares of ABC corporation”.
This is a summary of some of the most important but not all the rules about substantiating gifts. Our next post will deal with additional rules you need to know about.