JASON FREEMAN, JD - Charitable Contributions and Contemporaneous Written Acknowledgements

Albrecht v. Comm’r, T.C. Memo 2022-53 | May 25, 2022 | Greaves, J. | Dkt. No. 13314-20.


Short Summary: Martha Albrecht donated 120 items of Native American jewelry and artifacts (donation) to the Wheelwright Museum of the American Indian (Museum). Pursuant to the express terms of a “Deed of Gift” (deed), Albrecht transferred all her rights in the property, unless otherwise stated in a separate Gift Agreement. The Gift Agreement was not included with the deed, and the Museum did not provide Albrecht with any further written documentation concerning the donation. Albrecht filed Form 1040, U.S. Individual Income Tax Return, for the year at issue in which she reported the donation on Schedule A, Itemized Deductions, and attached a copy of the deed. The return was examined, and the IRS disallowed the donation on the ground that the requirements of section 170 were not met. Albrecht sought review in the Tax Court.

Key Issue:

  • Whether Albrecht, through the deed and the Gift Agreement, satisfied the contemporaneous written acknowledgement requirements of 26 U.S.C. § 170(f)(8)(B) to receive a charitable contribution deduction for the donation to the Museum?

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Joint Committee on Taxation Report on Tax Treatment of Charitable Contributions

Joint Committee on Taxation Report on Tax Treatment of Charitable Contributions

On March 11, 2022, the Joint Committee on Taxation published its 49-page report (the “Report”) relating to the federal tax treatment of charitable contributions. The Report was the subject of a public hearing held on March 17, 2022 where the Senate Committee on Finance considered economic issues relating to federal tax incentives for charitable giving and data relating to charitable contributions. See hearing at Hearing | Hearings | The United States Senate Committee on Finance.

Overall, the Report is a useful resource, although it is not “law” and there are many intricacies that the Report does not address or that may be addressed, just not in full detail. This Insights article provides a brief summation of some key statistics and content of the Report.

Key Statistics

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Charles Woodson - Charitable Contributions

Donations to charities can be deducted as an itemized deduction on your tax return. This means that to achieve any tax benefit from your charitable donations, you cannot use the standard deduction and instead must itemize your deductions. However, if the total of all your itemized deductions does not exceed the standard deduction amount for the year, then you are better off taking the standard deduction, but in doing so, you will get no tax benefit from your charitable contributions.

As a rule, most taxpayers just wait until tax time to add up their potential deductions and then use the higher of the standard deduction or their itemized deductions. If you want to be more proactive, here are some strategies that might work for you.

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To be deductible, the contributions must actually be paid in cash or other property before the close of your tax year, whether you use the cash or accrual method. It is very important that you keep proper records of all your cash and non-cash contributions.

Rules for Deducting Cash Contributions

You cannot deduct a cash contribution, regardless of the amount, unless you keep a record of the contribution. The following rules apply:

• For individual contributions under $250, your proof can be your canceled check or your receipt, or a bank statement containing the name of the charity, the date, and the amount.
• For individual contributions of $250 or more, you must obtain a written acknowledgement Read More

When someone gives you a gift, social protocol states that you should acknowledge the gift, expressing thanks to the donor for his or her thoughtfulness and generosity. It’s the right thing to do. That same protocol holds when the recipient is a charitable organization. However, in this case, legal requirements are added to social expectations. An IRS tax-exempt organization must fulfill certain legal obligations in acknowledging contributions from donors. So, in this case it’s not just the right thing to do, it’s the legal thing to do.

Let’s start simple with the most common type of contribution, one of cash. Cash contributions include payment in cash, by check, or through use of a credit card. Regardless of the form of the contribution, the organization is in essence receiving Read More

Individuals and businesses making charitable contributions for tax year 2014 should be reminded that several important tax law provisions have taken effect in recent years. Some of the changes taxpayers should keep in mind include:

Rules for Charitable Contributions of Clothing and Household Items

Household items include furniture, furnishings, electronics, appliances and linens. Clothing and household items donated to charity generally must be in good used condition or better to be tax-deductible. A clothing or household item for which a taxpayer claims a deduction over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Read More

The most intriguing aspect of maintaining this tax blog is the pleasure of meeting and engaging a wide variety of successful people all with the courage to take the risk of venturing out on their own profession in pursuit of dreams and aspirations. Sharing with me the lessons learned through experiences chalked up to enduring hard knock after hard knock I have learned from my readers and subscribers along the way of which I am profoundly thankful.

I couldn’t help but notice that many of my friends and clients alike, particularly those of you in the business of providing services to the community, have become successful beyond anyone’s wildest expectations and are now more prepared than ever to accept the significance of gifting in the greater scheme of life’s affairs. Because people that read my Read More

It’s tax time again and as you are gathering your receipts and documentation I feel compelled to mention Contemporaneous Charitable Contribution Documentation.  That is quite a mouthful, but if you want to survive your Internal Revenue Service audit, you should keep reading.  The IRS requires you to keep documentation of the things you claim on your tax return – the income and the expenses. That part generally makes sense, but the rules can get very specific for charitable contributions.

For cash contributions of more than $250 you need to follow the rules exactly and they are different than the rules for contributions of less than $250. For that $50 donation to United Way, a copy of the check will be just fine. But if you give a $500 check to the United Way, a copy of the check is not going to cut it. That’s where the contemporaneous charitable Read More

Is it real this time? –

In one of the most visible expressions of confusion in tax policy out of Washington D.C. is the treatment of a short list of tax laws that have been repeatedly extended only to expire only to be extended once again. These laws expire on midnight December 31st, 2013 unless… once again… the laws are extended.

• Teacher $250 deduction for qualified classroom expenses

• Deduction for state and local general sales taxes (in place of state income tax deduction)

• Deductibility of home mortgage insurance premiums Read More

Many Americans living and working overseas are involved in charitable causes. The question often arises whether US expats living abroad can obtain the tax benefit for a charitable contribution deduction? The answer depends on various factors, including those discussed below.

Where is the Charity Organized or Created?

The mere fact that a United States taxpayer is living abroad will not prevent the taking of a charitable deduction on the tax return. The more critical consideration involves where the charity is created to which he is making the contribution. Under the US tax laws governing charitable deductions, the organization must be “created or organized in the United States or Read More

Charitable contributions are one of the things that taxpayers can fully control when trying to get the best tax deduction.  The end of the year is often when people make charitable contributions.  People are making good on their charitable pledges for the year and the holiday season is a popular time to solicit donations and hold special events for charities.

Charitable contributions are allowed as an itemized deduction for taxpayers.  The deduction is limited to 50% of the taxpayer’s adjusted gross income for the year.  Sometimes for taxpayers with large contributions and a low income, planning the timing of contributions around that 50% limitation is critical.  Any excess charitable contributions can be carried forward, but that carry-forward only lasts five years. Read More