TAXPAYER LOSES INCOME TAX CHARITABLE DEDUCTION FOR LACK OF DOCUMENTATION

A recent case in the Tax Court is a reminder of the importance of obtaining the proper documentation for charitable contributions.  In that case, the Tax Court held that held that “the taxpayers could not deduct any of the charitable contributions, because the records that they produced were all self-generated and were not supported by contemporaneous receipts or bank records satisfying the rules of Internal Revenue Code Sec. 170(f)(8) and Internal Revenue Code Sec. 170(f)(17).’’

’The general rule is that no deduction shall be allowed for any contribution of $250.00 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the following requirements

(B)   Content of acknowledgment. An acknowledgment meets the requirements of this subparagraph if it includes the following information:

(i)  The amount of cash and a description (but not value) of any property other than cash contributed.

(ii)  Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i).

(iii)  A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.

For purposes of this subparagraph, the term “intangible religious benefit” means any intangible religious benefit which is provided by an organization organized exclusively for religious purposes and which generally is not sold in a commercial transaction outside the donative context.

Finally, the taxpayer is required to maintain certain records.  Internal Revenue Section 170(f)(17) provides that "No deduction [for a charitable contribution] shall be allowed under for any contribution of a cash, check, or other monetary gift unless the donor maintains as a record of such contribution a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution."