Documenting Charitable
Contributions
Russell James, J.D., Ph.D., CFP®
ProfessorTexas Tech University
Documenting Charitable
ContributionsPart I: Introduction
If I hit the target
and actuallydeduct the right amount,
isdocumentation
really a bigdeal?
Donor gives $80,000 of non-publicly traded stock ($3,700 basis) to charity. The required qualified appraisal is NOT completed, but the valuation is correct.
Result?
See Hewitt v. Commissioner, 109 T.C. 258 (1997)
Deduction reduced to
$3,700
Donor gives $80,000 of non-publicly traded stock ($3,700 basis) to charity. The required qualified appraisal is NOT completed, but the valuation is correct.
Result?
Donor gives $435,000 of equipment to public charity, but appraisal reports and receipts omit required information.
Later, to prepare for the audit, donor gets qualified appraisals. Result?
No deduction+ 20% penalty for underpayment of taxes
See Friedman v. Commissioner, T.C. Memo 2010-45
Donor gives $435,000 of equipment to public charity, but appraisal reports and receipts omit required information. Later, to prepare for the audit, donor gets qualified appraisals. Result?
KNOW the rules and
FOLLOW the rules!
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Cash $250+
As the opportunities for serious abuse increase, so do gift documentation requirements
Documenting Charitable
ContributionsPart I: Introduction
Documenting Charitable
ContributionsPart II: Cash Gifts
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
How? …did you value it?
IRS Form8283
Cash $250+
IRS Form1098-C
Summary of Qualified Appraisal on
8283
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
Cash $250+
or
How? …did you value it?
IRS Form8283
Summary of Qualified Appraisal on
8283
Note from charity before taxes filed or due
(1) Amount(s), date(s) & donor Credit Card Statement
Charity 210.00Two Hundred and No/100
A. DonorGift
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
Cash $250+
How? …did you value it?
IRS Form8283
Summary of Qualified Appraisal on
8283
Note from charity before taxes filed or due
(1) Amount(s), date(s) & donor
(2) “No goods or services were provided in exchange for these gifts.” [or describe and value items provided]
Charity 210.00Two Hundred Ten and No/100
A. DonorGift
Charity 240.00Two Hundred Forty and No/100
A. DonorGift
Charity 230.00Two Hundred Thirty and No/100
A. DonorGift
Charity 260.00Two Hundred Sixty and No/100
A. DonorGift
I give through payroll deduction at work to a united appeal, so, there isn’t a specific charity to give a receipt.
How do I substantiate?
If any single gift is $250+, use a pledge card indicating no goods or services were given in exchange, and the W-2 or paystub to substantiate.
What about documenting
gifts of property?
Documenting Charitable
ContributionsPart II: Cash Gifts
Documenting Charitable
ContributionsPart III: Property
Gifts
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
Cash $250+
How? …did you value it?
IRS Form8283
Summary of Qualified Appraisal on
8283
Note from charity before taxes filed or due
(1) Donor and date, location & description of property
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
So then, how exactly would this work?
For property gifts under $250, a receipt is not required where it is impractical
Note from charity before taxes filed or due
(1) Donor and date, location & description of property
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
Cash $250+
How? …did you value it?
IRS Form8283
Summary of Qualified Appraisal on
8283
Note from charity before taxes filed or due
(1) Donor and date, location & description of property
(2) “No goods or services were provided in exchange for these gifts.” [or describe and value items provided] *
*Part (2) not required for gifts <$250
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
Cash $250+
How? …did you value it?
IRS Form8283
Summary of Qualified Appraisal on
8283
Note from charity before taxes filed or due
(1) Date, location, and description of property
(2) “No goods or services were provided in exchange for these gifts.” [or describe and value items provided]
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
How? …did you value it?
IRS Form8283
Cash $250+
IRS Form1098-C
Summary of Qualified Appraisal on
8283
Note from charity before taxes filed or due
(1) Date, location, and description of property
(2) “No goods or services were provided in exchange for these gifts.” [or describe and value items provided]
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
Cash $250+
How? …did you value it?
Summary of Qualified Appraisal on
8283
IRS Form8283
Summary of qualified appraisal included on Form 8283
Note from charity before taxes filed or due
(1) Date, location, and description of property
(2) “No goods or services were provided in exchange for these gifts.” [or describe and value items provided]
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
Donor Records
Charity Statement
Charity Statement
Qualified Appraisal
Cash < $250
Property <$250
Property $250-$500
Property >$500
Property $5,000+ except publicly traded securities
Property >$500,000Artwork >$20,000 except publicly traded securities
Donor Records
Why? …did you give? quid pro quo?
Who? What? When? Where?
Cash $250+
How? …did you value it?
IRS Form8283
Summary of Qualified Appraisal on
8283
Note from charity before taxes filed or due
(1) Date, location, and description of property
(2) “No goods or services were provided in exchange for these gifts.” [or describe and value items provided]
Qualified Appraisal
(attach the entire appraisal
report to the tax return)
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
Note from charity before taxes filed or due
(1) Date, location, and description of property
(2) “No goods or services were provided in exchange for these gifts.” [or describe and value items provided]
Donor’s reliable records of gift, charity, date, place, FMV (and cost basis if relevant)
Charities need not report quid pro quo information for gifts of $75 or less.
Donors need not consider quid pro quo benefits
•Item value does not exceed 2% of the donation or $106*
•Item cost ≤$10.60* and gift $53.00*+
*adjusted annually for inflation (2016)
De Minimis
Documenting Charitable
ContributionsPart III: Property
Gifts
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Documenting Charitable
Contributions
Russell James, J.D., Ph.D., CFP®
ProfessorTexas Tech University
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