Posted by MHK on March 22, 2001 at 14:32:29:
Many of you know that I'm an accountant for a living, and in my former life I was an IRS agent and I've been getting a few questions about the deductibility of chamber day/evening, challenge donations.
Let me address them as best as I can, subject to a few disclaimers:
1) I am NOT rendering a legal analysis on behalf of the Catalina Hyperbaric Chamber, I'm speaking on my behalf only;
2) I encourage everyone to consult their own tax advisor.
Pursuant to Internal Revenue Code Section 170(a)(1) "There shall be allowed as a deduction any charitable contribution... payment of which is made in the taxable year."
170(c)(1) further provides " For purposes of this section, the term " charitable contribution means a contribution of gift to or for the use of..
(D) which is not disqualified for tex exemption under 501(c)(3)attempting to influence legislation..."
The Catalina Hyperbaric Chamber is a qualified 501(c)(3) charitable organization and as such CERTAIN [ emphasis added} contributions are tax deductible.
The reason that I note CERTAIN, NOT ALL, is because the regulations promulgated under Reg. Sec. 1.170A-1(h) state in pertinent part " No part of a payment that a taxpayer makes to or for the use of an organization described in 170(c) that is in consideration for goods or services is a contribution or gift."
In plain english, that means that you can only deduct an amout exceeding the fair market value for the goods or services received.
In the instant case, you would need to deduct the fair market value of the boat trip, and/or evening dinner from the amount you contribute and the excess, if any, is considered a deductible amount.. My understanding is that the Chamber Day committe will be providing the fair market value of the goods and services. It's very important to note that the regulations are clear in that the burden of proof is on the taxpayer to support the deduction and the resulting fair market value...
On the other hand, any direct contribution ( ie; a contribution to the MHK challenge) should be fully deductible, subject to any underlying limitations otherwise in exsistence, since there is no quid pro quo. You make a direct deduction, you get the tax deduction..
Hope that helps...
Later