When is a gift a gift?

[duanecpa]

If a person 'donates' $13,000 to a qualified charitable organization but the 'donation' to the qualified charitable organization is conditioned upon the qualified charitable organization passing the $13,000 to a specific person identified by the donor of the $13,000 - is this a gift to the qualified charitable organization?

Part 2 - if the initial $13,000 is a gift which can be deducted, can the same donor 'gift' another $13,000 to the same individual who is the receive the initial $13,000 from the qualified charitable organization without paying gift tax?

Citations would be helpful.

Thank you.

[Roberts]

You are a CPA and don't know the answer to Part 1?

[Bees Knees]

IRS Pub 526, page 3

Generally, you can deduct your contributions of
money or property that you make to, or for the
use of, a qualified organization. A gift or contribution
is “for the use of” a qualified organization
when it is held in a legally enforceable trust for
the qualified organization or in a similar legal
arrangement.

The contributions must be made to a qualified
organization and not set aside for use by a
specific person.

[Gary2]

IRC 170(c), paying particular attention to the repeated limitations, such as 170(c)(2)(C).

[Bees Knees]

Iis this a gift to the qualified charitable organization?

This is the key. If the qualified charitable organization is required to pass the $13,000 to a specific person, then according to the cited Pub, it is not a donation to the qualified charitable organization, but rather, a gift to the person who is to receive it.

Thus, no charitable contribution deduction (because it is not to a qualified charitable organization), and normal gift tax rules apply (because it is a gift to an individual).

[Roland Slugg]

Some charitable organizations, such as large hospitals, allow donations to be earmarked for use by a specific department or purpose such as cancer research, orthopedic technology development, etc. In some cases the designated use or sub-department might be so specific or limited that a single person ... a physician, say ... could be the de-facto recipient for the use of the donated funds.

If this is what duanecpa had in mind in his original post, it would be worth further investigation.

Regarding duanecpa's post and the childish reply by "Roberts," I support the former and censure the latter. IMO public criticism and ridicule of people's knowledge has no place on this forum.

[Corduroy Frog]

Not Always Clear

You are a CPA and don't know the answer to Part 1?

Aside from being rude, it is not necessarily a slam-dunk that a CPA (or anyone) would be expected to know.

What if the charitable organization passed the $13,000 through via its typical policies and operations, and then the donor gave yet another $13,000 to this individual? Not exactly crystal clear.

I suspect this is often done with every intent of simply doubling the annual gift, yet if the charity passes through (even with earmarks) via its established bylaws and procedures, I think it would be difficult to disallow. Very dependent on "facts and circumstances."

[S T]

I think Duanecpa had a very valid question - maybe not all of the "details" were posted and maybe the OP was not stated correctly, which is an inherent issue when we post - we try to state the facts as we know them without a lot of details ---- and then it is found that more details should be posted for a valid response to our post.

We know that "contributions to specific individuals" there is not a deduction for a contribution, and I am sure that the OP had knowledge of that - I in the past have posted something similar - just asking a question.

The IRS has stated:
If contributions to the fund are earmarked by the donor for a particular individual, they are treated, in effect, as being gifts to the designated individual and are not deductible. However, a deduction will be allowable where it is established that a gift is intended by a donor for the use of the organization and not as a gift to an individual. The test in each case is whether the organization has full control of the donated funds, and discretion as to their use, so as to insure that they will be used to carry out its functions and purposes. Revenue Ruling 62-113.

I am glad that Roland Slugg posted on this - not sure I have an opinion - except that I do know the donor can not give a "donation-gift" to a charitable organization earmarked for a "designated" personal party--- but there might be extenauting circumstances not posted

I looked up several "google searches on designated contributions" - and I think you have to look to the "Church" policy for same - there must be a "restriction" or the Church already has a "policy in place" for such contributions.

Let us not pass judgment on a post or the "Poster" so quickly - but lend assistance to the OP - All of us need some "reinforcement" or information gathering at some point. I know that I am here on an almost regular basis asking or posting questions, could it be that that "you" would also be here asking or posting??

Sandy

[JohnH]

Good post, Sandy.

[taxea]

I just took a test. One the instructions for taking the test said not to read anything into the statement but to answer based on the information provided. I find that often, on this site, posters read into the post much that was not stated. In this case the question was clear as stated and the answer should be just as clear. No...a gift/donation designated to a single person is not deductible.

I come from a state where I grew up without "politically correct attitudes". When one gets to a point that they can't laugh at themselves and others it is very sad in my opinion. We grew up on ethnic jokes, ethnic "ribbing" and still have a very popular comedian that is appreciated because he points out the cultural aspects of various races and makes us all laugh.

My point is one can only be offended or embarrassed or any other feeling if you let yourself. I happen to agree that if this or any CPA actually does taxes then he should know the answer and I didn't find the comment offensive. If he doesn't do taxes then he should have said so in his post; in which case I doubt the comment would have been posted.

Lighten up people

[FEDUKE404]

No Go

It has ALWAYS been my understanding that a strings-attached "gift" as decribed in the original post would not pass scrutiny as a qualifying contribution.

While it is certainly true that, within certain guidelines, a donation can be allocated (such as to a specific school at a university, or to general mission work at the church, etc.) I am unaware of any situations where a gift for a stated individual, no matter how good the intent, is acceptable.

But if anyone can provide such a cite, I will definitely file it away for future reference!

FE

[kpangelinan]

If a person 'donates' $13,000 to a qualified charitable organization but the 'donation' to the qualified charitable organization is conditioned upon the qualified charitable organization passing the $13,000 to a specific person identified by the donor of the $13,000 - is this a gift to the qualified charitable organization?

Part 2 - if the initial $13,000 is a gift which can be deducted, can the same donor 'gift' another $13,000 to the same individual who is the receive the initial $13,000 from the qualified charitable organization without paying gift tax?

Citations would be helpful.

Thank you.

Part 1: Ummmm.....NO!

Part 2: As stated, gift tax rules apply.