Charitable Deduction Substantiation Requirements

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Recently, the United States Tax Court denied charitable contributions in full in two different cases.  The donations were denied for failure to obtain proper substantiation in a timely manner.  The IRS has provided a list of the substantiation and documentation required for various contributions.  These rules apply to individuals making qualified contributions to IRC §501(c)(3) organizations.  Additional rules apply when gifting a partial or restricted interest, gifts via trusts, and gifts with remainder interest.

We have included a schedule prepared by Spidell Publishing, Inc. for your easy reference:

Amount

Documentation

Substantiation

Cash donations of less than $250

Bank record

Includes canceled check; bank, credit union or credit card statement showing name; and transaction posting date (credit card)

Written communication from charity

Name of charity, date and amount of contribution

Payroll deduction

Pledge card and pay stub, W-2 wage statement, or other document furnished by employer, including total amount withheld for charity

Cash donations of $250 or more

Written acknowledgment from the charity for each donation

Name of charity, date, amount paid, description, and estimate of value of goods or services provided by the charity

Noncash contributions of less than $250

Receipt from donee or reliable records

Property donations greater than $250 and not more than $500

Contemporaneous written acknowledgment

Name of charity, date, amount paid, and description (but not value) of goods or services provided by the charity

Property donations greater than $500 and not more than $5,000

Written acknowledgment

All of the above, plus: (1) how you got the property; (2) date you got the property; and (3) cost or other basis.

Must file Form 8283, Noncash Charitable Contributions

Donations of $5,000 or more excluding stock, certain works of art, and autos

Qualified appraisal

Attach appraisal to return and complete page 2 of Form 8283

Donations of art valued at $20,000 or more

Signed appraisal and photograph

Attach signed appraisal to return and provide photograph of sufficient quality and size to fully show object if requested by the IRS

Stock of publicly traded corporation

No appraisal required if as of date of the contribution market quotations are readily available on an established securities market

Attach Form 8283 to return

Nonpublicly traded stock

Contributions greater than $5,000 and less than or equal to $10,000

A partially completed appraisal summary; complete Form 8283, Part I

Contributions greater than $10,000

Attach qualified appraisal to return

Vehicle, boat and airplane with value of more than $500

Value is the lesser of the gross sales proceeds or the FMV of the vehicle if no “significant use or material improvement”

Taxpayer needs contemporaneous written acknowledgment  from donee organization; donee organization must use Form 1098-C to report value of vehicle donations, if vehicle is sold; this can be used to provide acknowledgment to the donor

If you have any questions or require further information, please contact our office at (714) 836-8300.

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