Don’t Let a Good Deduction Go Bad

There are potential pitfalls between a client and his or her charitable deduction.  Keep these cautions in mind during year-end reviews:

Timing

  • A check postmarked as late as December 31 qualifies for a 2014 deduction.

  • Gifts of stock are completed when the shares reach the charity’s account.

Valuation

  • A qualified appraisal is needed for gifts in excess of $5,000.

  • Appraisals can be done no more than 60 days prior to the date of the gift and no later than the due date of the return (with extension) on which the deduction is claimed.

Substantiation

  • Charitable deductions of $250 or more must be substantiated with a contemporaneous written acknowledgment from the charity describing the gift and must include a statement that no goods or services were received in exchange or a good faith estimate of the value of any goods or services provided by the charity.

  • Donors must have the acknowledgment letters by the earlier of the date the return is filed or the due date (with extension) for filing the return.

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