Charitable Contributions
Bill Lentz
business that we use frequently. This person has submitted an in-kind
billing for the year's services (i.e. gross billing of $1,500, net due
of $0) and requested that we note the $1,500 as a contribution on his
personal account. I have no knowledge of how this business is
structured (corp, llc, sole prop., etc.) or how it is accounting for
this transaction. Is is appropriate for the church to account for it
this way?
When my church secretary asked our software support how to record an
in-kind contribution, they suggested that the church write checks for
the service, then let the business endorse them back to us?
Thoughts?
Thanks
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removep...@yahoo.com
> I'm the treasurer for a church. One of our members owns a service
> business that we use frequently. This person has submitted an in-kind
> billing for the year's services (i.e. gross billing of $1,500, net due
> of $0) and requested that we note the $1,500 as a contribution on his
> personal account. I have no knowledge of how this business is
> structured (corp, llc, sole prop., etc.) or how it is accounting for
> this transaction. Is is appropriate for the church to account for it
> this way?
>
> When my church secretary asked our software support how to record an
> in-kind contribution, they suggested that the church write checks for
> the service, then let the business endorse them back to us?
An email/letter from the company saying that they will waive the fee
of $1,500 as a donation is sufficient. You do have to send them a
letter acknowledging the donation, as you hopefully do for any
donation.
HLunsford
> On Dec 15, 10:18 am, Bill Lentz <blentz1...@gmail.com> wrote:
>
>> I'm the treasurer for a church. One of our members owns a service
>> business that we use frequently. This person has submitted an in-kind
>> billing for the year's services (i.e. gross billing of $1,500, net due
>> of $0) and requested that we note the $1,500 as a contribution on his
>> personal account. I have no knowledge of how this business is
>> structured (corp, llc, sole prop., etc.) or how it is accounting for
>> this transaction. Is is appropriate for the church to account for it
>> this way?
>>
>> When my church secretary asked our software support how to record an
>> in-kind contribution, they suggested that the church write checks for
>> the service, then let the business endorse them back to us?
>
> An email/letter from the company saying that they will waive the fee
> of $1,500 as a donation is sufficient. You do have to send them a
> letter acknowledging the donation, as you hopefully do for any
> donation.
>
receipts, whether for over 250$ or less. It is customary and good
practice to do so, however.
But IRS does not require it.
--
Holiday ChEAr$!
Harlan Lunsford, EA n LA
Barry Margolin
HLunsford <hlun...@bellsouth.net> wrote:
> Contrary to common expectations, a charity is not required to furnish
> receipts, whether for over 250$ or less. It is customary and good
> practice to do so, however.
>
> But IRS does not require it.
Pub 506 says, "For any contribution of $250 or more ..., you must obtain
and keep in your records a contemporaneous written acknowledgement from
the donee organization ...."
And Pub 526 says, "You can claim a deductions for a contribution of $250
or more only if you have an acknowledgement of your contribution from
the qualified organization or certain payroll deducsion records."
So I guess you're literally correct in saying that the organization
doesn't have to provide a receipt. But if they don't, you can't deduct
it. The charity would be shooting themselves in the foot by refusing to
provide receipts -- most potential donors will prefer that their
contributions be deductible (charities generally emphasize this feature
of donations).
--
Barry Margolin, bar...@alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***
Stuart A. Bronstein
> I'm the treasurer for a church. One of our members owns a
> service business that we use frequently. This person has
> submitted an in-kind billing for the year's services (i.e. gross
> billing of $1,500, net due of $0) and requested that we note the
> $1,500 as a contribution on his personal account. I have no
> knowledge of how this business is structured (corp, llc, sole
> prop., etc.) or how it is accounting for this transaction. Is
> is appropriate for the church to account for it this way?
Sounds like he's trying to get a deduction for services. That's
not allowed. If you pay him $1500 and then he gives it back, he'll
have both income and an offsetting deduction. But he can't get
just the deduction.
If you give him a letter you received a $1500 contribution when you
received services instead of cash, it could be considered tax
fraud.
> When my church secretary asked our software support how to
> record an in-kind contribution, they suggested that the church
> write checks for the service, then let the business endorse them
> back to us?
Exactly. But I'd doubt that would serve his purposes.
--
Stu
http://downtoearthlawyer.com
Seth
Stuart A. Bronstein <spam...@lexregia.com> wrote:
>Sounds like he's trying to get a deduction for services. That's
>not allowed.
Correct. However, if he would normally owe dues of $2000 and he wants
to pay only $500, that's not a problem (with taxes, anyway).
Seth
Wallace
"Stuart A. Bronstein" <spam...@lexregia.com> wrote in message
news:Xns9CE289CEE265Bs...@130.133.1.4...
> Bill Lentz <blent...@gmail.com> wrote:
>
>> I'm the treasurer for a church. One of our members owns a
>> service business that we use frequently. This person has
>> submitted an in-kind billing for the year's services (i.e. gross
>> billing of $1,500, net due of $0) and requested that we note the
>> $1,500 as a contribution on his personal account. I have no
>> knowledge of how this business is structured (corp, llc, sole
>> prop., etc.) or how it is accounting for this transaction. Is
>> is appropriate for the church to account for it this way?
>
> Sounds like he's trying to get a deduction for services. That's
> not allowed. If you pay him $1500 and then he gives it back, he'll
> have both income and an offsetting deduction. But he can't get
> just the deduction.
>
> If you give him a letter you received a $1500 contribution when you
> received services instead of cash, it could be considered tax
> fraud.
Perhaps you should send him a thank you letter for his donated services, his
stated value of $1500.00 being so very generous.
then, the tax matter is up to him and him alone. And it should not be
considered out of the ordinary to thank someone.
Wallace
"Stuart A. Bronstein" <spam...@lexregia.com> wrote in message
news:Xns9CE289CEE265Bs...@130.133.1.4...
>
>> I'm the treasurer for a church. One of our members owns a
>> service business that we use frequently. This person has
>> submitted an in-kind billing for the year's services (i.e. gross
>> billing of $1,500, net due of $0) and requested that we note the
>> $1,500 as a contribution on his personal account. I have no
>> knowledge of how this business is structured (corp, llc, sole
>> prop., etc.) or how it is accounting for this transaction. Is
>> is appropriate for the church to account for it this way?
>
> Sounds like he's trying to get a deduction for services. That's
> not allowed. If you pay him $1500 and then he gives it back, he'll
> have both income and an offsetting deduction. But he can't get
> just the deduction.
>
> If you give him a letter you received a $1500 contribution when you
> received services instead of cash, it could be considered tax
> fraud.
>
>> When my church secretary asked our software support how to
>> record an in-kind contribution, they suggested that the church
>> write checks for the service, then let the business endorse them
>> back to us?
>
> Exactly. But I'd doubt that would serve his purposes.
maybe his purpose is not a tax deduction at all. Maybe his purpose is to
avoid other members thinking he is a cheapskate for not donating.
paulthomascpa
"Barry Margolin" <bar...@alum.mit.edu> wrote
> In article <hg8tmv$mj3$1...@news.eternal-september.org>,
> HLunsford <hlun...@bellsouth.net> wrote:
>
>> Contrary to common expectations, a charity is not required to furnish
>> receipts, whether for over 250$ or less. It is customary and good
>> practice to do so, however.
>>
>> But IRS does not require it.
>
> Pub 506 says, "For any contribution of $250 or more ..., you must obtain
> and keep in your records a contemporaneous written acknowledgement from
> the donee organization ...."
>
> And Pub 526 says, "You can claim a deductions for a contribution of $250
> or more only if you have an acknowledgement of your contribution from
> the qualified organization or certain payroll deducsion records."
>
> So I guess you're literally correct in saying that the organization
> doesn't have to provide a receipt. But if they don't, you can't deduct
> it. The charity would be shooting themselves in the foot by refusing to
> provide receipts -- most potential donors will prefer that their
> contributions be deductible (charities generally emphasize this feature
> of donations).
Correct. The non-profits I sit on the Boards of frequently provide letters
to larger donors. We have the standard blurb about the donor consulting
their tax advisor about their specific deductibility.
I hate giving out letters where services were "donated". We have cooked the
letter down to "thanks for the SERVICES you provided" and do not mention any
monetary amount.
D. Stussy
news:0c188fb9-2b73-497f...@x5g2000prf.googlegroups.com...
> On Dec 15, 10:18 am, Bill Lentz <blentz1...@gmail.com> wrote:
> > I'm the treasurer for a church. One of our members owns a service
> > business that we use frequently. This person has submitted an in-kind
> > billing for the year's services (i.e. gross billing of $1,500, net due
> > of $0) and requested that we note the $1,500 as a contribution on his
> > personal account. I have no knowledge of how this business is
> > structured (corp, llc, sole prop., etc.) or how it is accounting for
> > this transaction. Is is appropriate for the church to account for it
> > this way?
> >
> > When my church secretary asked our software support how to record an
> > in-kind contribution, they suggested that the church write checks for
> > the service, then let the business endorse them back to us?
>
> An email/letter from the company saying that they will waive the fee
> of $1,500 as a donation is sufficient. You do have to send them a
> letter acknowledging the donation, as you hopefully do for any
> donation.
Out of pocket donations exceeding $250/year require the section 170A(f)(8)
acknowledgement letter to be deductible.
The service provider may deduct only his actual costs, not the value of his
service at the rate he normally charges. Your letter should NOT state a
valuation of $1,500.00.
Stuart A. Bronstein
> Stuart A. Bronstein <spam...@lexregia.com> wrote:
>
>>Sounds like he's trying to get a deduction for services. That's
>>not allowed.
>
> Correct. However, if he would normally owe dues of $2000 and he
> wants to pay only $500, that's not a problem (with taxes,
> anyway).
Are you suggesting that if he were a member and so was required to
pay $2,000 per year to maintain his membership, that he would be
allowed to deduct his $1,500 service contribution?
Deductible or not, in this case, he might have cancellation of debt
income.
--
Stu
http://downtoearthlawyer.com
Seth
Stuart A. Bronstein <spam...@lexregia.com> wrote:
>se...@panix.com (Seth) wrote:
>> Stuart A. Bronstein <spam...@lexregia.com> wrote:
>>
>>>Sounds like he's trying to get a deduction for services. That's
>>>not allowed.
>>
>> Correct. However, if he would normally owe dues of $2000 and he
>> wants to pay only $500, that's not a problem (with taxes,
>> anyway).
>
>Are you suggesting that if he were a member and so was required to
>pay $2,000 per year to maintain his membership, that he would be
>allowed to deduct his $1,500 service contribution?
No, I'm suggesting that he might pay $1,500 of his dues with services.
>Deductible or not, in this case, he might have cancellation of debt
>income.
A lot of religious organizations make their dues (nominally)
voluntary.
Seth
Gene E. Utterback, EA, RFC, ABA
news:9706b7eb-a5b0-4df9...@t42g2000vba.googlegroups.com...
> I'm the treasurer for a church. One of our members owns a service
> business that we use frequently. This person has submitted an in-kind
> billing for the year's services (i.e. gross billing of $1,500, net due
> of $0) and requested that we note the $1,500 as a contribution on his
> personal account. I have no knowledge of how this business is
> structured (corp, llc, sole prop., etc.) or how it is accounting for
> this transaction. Is is appropriate for the church to account for it
> this way?
>
> When my church secretary asked our software support how to record an
> in-kind contribution, they suggested that the church write checks for
> the service, then let the business endorse them back to us?
>
> Thoughts?
>
> Thanks
There's more to this than first appears and doing this could be trouble for
your church.
In order for an item to be deductible as a charitable contribution there has
to be some economic disbursement by the person claiming the deduction. In
your situation the business could claim a deduction for their actual costs
associated with providing the service - this would include parts and
documented labor actually paid the person who did the work. This is where
it gets tricky -
See the business gets to deduct these ANYWAY as a regular cost of doing
business. They do NOT get a second deduction because they did them for a
church.
AND you have no way of knowing what their actual costs were. For all you
know it cost him $1.00 to do what you needed done.
If he wants a deduction for $1,500 then -
The church can write him a check, which would be income to him and he
can cash it and give the money back OR
He can write a check to the church for $1,500 and get the deduction.
But YOU have no way of knowing WHAT his costs where and I'd recommend
against doing what you've been asked to do. Doing it is asking for trouble.
Gene E. Utterback, EA, RFC, ABA
Seth
Gene E. Utterback, EA, RFC, ABA <ge...@alliancetax.com> wrote:
>"Bill Lentz" <blent...@gmail.com> wrote in message
>news:9706b7eb-a5b0-4df9...@t42g2000vba.googlegroups.com...
>> I'm the treasurer for a church. One of our members owns a service
>> business that we use frequently. This person has submitted an in-kind
>> billing for the year's services (i.e. gross billing of $1,500, net due
>> of $0) and requested that we note the $1,500 as a contribution on his
>> personal account.
>In order for an item to be deductible as a charitable contribution
>there has to be some economic disbursement by the person claiming the
>deduction.
I don't recall that Bill specified whether the purpose was for a
charitable contribution deduction, or payment in kind for church
membership dues.
Seth