Non Cash Charitable Donations

[FEDUKE404]

Receipts R Us

Please put this in the Rip Van Winkle category, but just awakening to read this thread:

I thought under current rules ALL contributions require a receipt. Yes, I know things get antsy when you throw $5 in the Salvation Army kettle, but....just don't toss a $20 bill into the church plate every Sunday and then expect to claim that without problems.

Also that a copy of a check is now more or less worthless upon audit, except perhaps to substantiate payment was made on something separately supported by a receipt. (Consider the situations where someone writes a check to the church but in reality is buying a Christmas tree at a lot operated by said church, or perhaps is paying for bus fare on a church-sponsored trip.)

Reminds me of a creative fellow (years ago) who would write a check each Sunday to XYZ Church in the amount of the change collected from the Sunday School offerings. (Yes, he was a coin collector and those were the days when it was not unusual to toss loose change into the collection baskets there.) It seems he later encountered a problem with the IRS, even though he had a handful of canceled checks made out to the church.

As for the comments on what I "require," I generally tell my clients I need to see the receipts. Aside from verifying the amounts (and possible reductions in same for value received) another issue is weeding out "charities" which just are not such, but rather PACs and similar. For established clients, I will leave some wiggle room there if they can't easily find the receipt for their $10 donation to the March of Dimes.

FE

[MAJ]

New?... Eh... Depends on definition...

MAJ - you seem to be new on this board and a fairly new tax pro.

You apparently haven't been through the audit process yet to actually experience what documentation is required to get IRS clearance.

New here? I've been around for a short while - more vocal recently. I've been doing taxes for a number of years. I totally agree with the statements made (what did I do last year, how much can I do) - I think we all have some clients like that. I have always pushed my clients for full documentation. Many provide - some just have lists - some no clue, but of course want to take hte maximum they can take even if they (most likely) donated very little.. I try to instill in them the need to have all this information readily available. I am not here to audit them down to the dime but in the event of an IRS initiated audit they need to have this information available or they will pay the difference and then some. It's a rough place to be - Like it was said - you tend to know your client base over time. There are some I scrutinize more than othesr based on their prepardness, answers and sometimes attitude. I've got to cover my @$$ first. I have not gone through a charitable donation audit (SS Disability lump sum distribution audit, yes). Most of my clients really don't stand out more than the others. I scan & keep copies of all documents received. If the client has other deductibles I have them list and sign the paper. Scan a copy for me. I may have to re-think that....

[Lion]

Thanks

Thank you, John.

[Burke]

Wow -- I do not require a receipt for each and every entry. Should I? You've got me over thinking on a Friday afternoon...... Do the rest of you all REQUIRE a receipt for each donation?

I think you misunderstood. You said cash. And for cash, yes, I require the receipt. Clients often ask about the Xmas Salvation Army kettles, cash in the collection plate, etc. Also, for goods, I require the receipts. If they have cancelled checks, or copies of those checks -- you can hardly get the originals any more -- I will take those, although I advise they need the receipt from the organization too. Most of my clients now will send me the receipts, and if they don't, I require an itemized list of organizations and the amounts donated, dates, etc. I have out-of-state people, and for those, I prefer the listing (except for the goods donations) than all those receipts which I have to mail back. And you get an innate sense of who is making things up. You know, the ones that say "same as last year." And "what is the amt they let you take?" And I have one who used to want to always add another $1,000 to the church receipt for cash each Sunday. He probably did contribute that, but he doesn't do it anymore due to the more stringent rules and the fact that I won't put it on the return.

[Burke]

If it will let me leave it blank I'm sure it sends up all kinds of RED audit warnings.. Don't like RED Audit warning messages!!

What sends up red audit warning messages is the amount, not the other info. The only audit I ever had on contributions was for someone who tithed at his church, it was all cash (checks), and he had every one plus the receipt from the church. And even then, the auditor told me it was because he had another item on his return which caused it to fall out for audit, neither of which by itself would have done it. A loss on a Sche C. Fully documented. No change on audit.

[Uncle Sam]

Charitable Donation

MAJ - you seem to be new on this board and a fairly new tax pro.

You apparently haven't been through the audit process yet to actually experience what documentation is required to get IRS clearance.

Two years ago I had a correspondence audit on a client where IRS was auditing medical deductions and charitable donations.

Since the charitable donation is the subject here -
Not only did I submit photocopies of every donation check - but attached whatever paperwork was saved by the client that went along with the check - i.e. the formal acknowledgement letter from the charity, the solicitation describing the charity, etc.

100% acceptance.

There were a couple of small donations that client had no substantiation for - so IRS of course couldn't accept it - but whatever we did submit with paperwork - IRS accepted - no dispute.

[MAJ]

No Tickee - No Washee??

Absolutely, no receipt -- no deduction.

Wow -- I do not require a receipt for each and every entry. Should I? You've got me over thinking on a Friday afternoon......

Do the rest of you all REQUIRE a receipt for each donation? don't get me wrong I have some clients that are very organized and have them right there - I also have some that don't but I do know a few of them donate to church because they go to the same church I do. They can easily get a printout like I do...

I actually have one client that donates a lot. Nurse Pracitioner in the Cancer wing. She had cancer herself. She donates a decent amount anually - She had one check she chouldn't find when we did the taxes but knows she donated it. $500 or more.. She wouldn't take the donation. Clients swings all around the ropes on this one..

I have a headache now... Making me feel like I need to audit people instead of providing a level of due diligence. Many times I try to make them understand that if they are exagerating their donations by say $1,000 they may get an extra $250 but is that worth the IRS breathing down your neck? I've tried all kinds of tactics. Vanilla envelope - Pull all donation receipts in their during the year - Only pay by check - Use quicken. Disorganized peope are who they are.

[luke]

Agree

with Burke!

[RitaB]

Well, well

I tell them to keep the individual donations below $500. The benefit is by keeping it below $500 you don't have to complete columns D, E, or F on the 8283. So that eliminates date acquired, how acquired, and basis.

I feel like such a moron. I gotta start reading these forms. Thank you, David1980.

[JohnH]

Here's one version of the statement. I have it in an Excel spreadsheet and sometimes modify it for unusual situations.

[MAJ]

Blank -- does my software allow that????

I like John's idea. And I require the receipts, make them value them, and have an itemized list. If I feel values are inflated, I resort to TB page for FMV and challenge TP to prove otherwise. I have never filled out an 8283 where they know when they bought things, unless it was stock. So I use "various" on nearly every one, especially since most of the time there are numerous items. And the original cost is almost always blank, except for stocks as I mentioned. I will photocopy those receipts as well, along with all the other tax documents.

You leave the original cost blank? Never had a problem with that? i don't think my software will allow me to leave it blank. Now you have me 2nd guessing... Ding Dang... Hmmm.. That's always a joke item if you ask me. If you have one item - sure -- easy guess. 427 things? Hah!
If it will let me leave it blank I'm sure it sends up all kinds of RED audit warnings.. Don't like RED Audit warning messages!!

[Burke]

How do others handle this? Also on the cash end. Do you require any type of proof?

Absolutely, no receipt -- no deduction.

[Burke]

I like John's idea. And I require the receipts, make them value them, and have an itemized list. If I feel values are inflated, I resort to TB page for FMV and challenge TP to prove otherwise. I have never filled out an 8283 where they know when they bought things, unless it was stock. So I use "various" on nearly every one, especially since most of the time there are numerous items. And the original cost is almost always blank, except for stocks as I mentioned. I will photocopy those receipts as well, along with all the other tax documents.

[MAJ]

Mimic 8283

If their valuations are over $500, I give them a form to fill in, sign, and date. It mimics the layout of the 8283. So the info I enter concerning FMV and original cost is what they say it is, not something I pulled out of thin air. And if they 're audited, I can show where I got my numbers.

That's actually not a bad idea. I mean when we get there we banter about on average how old were the donated items. 1 year; 2; 10? Then we try to figure a basis. There are different types of people. Those that shop to shelf; middle shelf; and the ones that bought the stuff i donated last year at the Church Thrift shop. I tend to know my clients but that's not helping them in an IRS pinch.


Sounds nuts but for any decent items I purchase now I try to scan the receipt and file it under its general heading. The receipts they hand our today (I AM CONVINCED) are designed to self destruct / desolve after a few months or a year (tops). I suppose OCR would be best for searchability. The full version of Nitro PDF (I had mentioned in a previous post) has an OCR option for $119 - that's full product and OCR for $119. Not bad really. Still trying to review the full abilities. Could be great to use for scanned client data and seachability later in life.

It's Friday people... And I am thankful for that... Had a great nap on the bus the morning while traveling to the city (those double sided candles really burn sometimes). Enjoy the time while we have it --- The fun starts.................................... Soon!

[JohnH]

If their valuations are over $500, I give them a form to fill in, sign, and date. It mimics the layout of the 8283. So the info I enter concerning FMV and original cost is what they say it is, not something I pulled out of thin air. And if they 're audited, I can show where I got my numbers.