Dances and Auctions and Golfing . . . Oh My!

Many payments that clients think are charitable contributions are not, in fact, deductible in the eyes of the IRS.  This is most common where donors are attending an event such as a dinner or golf outing.  To assist supporters who purchase tickets to such events, charities are required to provide donors with a written good faith estimate of the value of any goods or services provided for payments in excess of $104 (2014 amount) (IRS Pub. 1771).  For example, an invitation to a golf outing might state that $50 of the $250 cost of the event is a deductible charitable gift.  If a donor purchases a ticket and chooses not to attend, the deduction is still limited to the stated amount, unless the benefit is rejected either by checking a box on the solicitation or by returning the tickets [Rev. Rul. 67-246].

In the case of an auction, the winning bidder is generally considered to have paid fair market value for the item, and is therefore not entitled to a deduction, unless the donor can demonstrate that he or she paid an amount in excess of fair market value and that the difference was intended as a charitable gift [Reg. §1.170A-1(h)].

Certain items are considered de minimus and will not reduce a donor’s deduction.  The safe harbor guidelines provide that the value of low-cost items such as keychains, mugs and calendars that bear the organization’s name and logo are not a substantial benefit.


Copyright © by R&R Newkirk. All rights reserved.