Contributions - Another Question

[JohnH]

A group of parents band together to renovate the softball field for their local public school. My client buys $3,000 worth of new fencing, hauls it over to the school & donates to the project. Is it better to handle this as a cash contribution or to report on the 8283?

Same question for the $300 he paid to rent a machine used to install the fencing.

[Chief]

8283

John, I would handle this on the 8283. Tell your client if he makes any contributions in the future to write checks to the school organization and handle as cash contributions.

[veritas]

John

You need a receipt from the school for the in-kind contributions before you file the tax return.

[JohnH]

Thanks for the replies. He gave me receipts from Lowe's and the rental center when he initially brought his info in. He's on extension, and I suggested that he also get an acknowledgement letter from the school's althletic director before we file (just to cover all the bases). My initial question arose because the Tax Book says payments "on behalf of" a charity are treated as cash contributions.

[Jiggers]

Receipts

Thanks for the replies. He gave me receipts from Lowe's and the rental center when he initially brought his info in. He's on extension, and I suggested that he also get an acknowledgement letter from the school's althletic director before we file (just to cover all the bases). My initial question arose because the Tax Book says payments "on behalf of" a charity are treated as cash contributions.

Receipts from Lowe's and the rental center don't qualify as proof of the donation.

A statement from the school, according to specific instructions by the IRS, would qualify.

Again, it would have been better to make the contribution to the school and have them make the purchases.

[veritas]

Where is the refernce in TTB?

Thanks for the replies. He gave me receipts from Lowe's and the rental center when he initially brought his info in. He's on extension, and I suggested that he also get an acknowledgement letter from the school's althletic director before we file (just to cover all the bases). My initial question arose because the Tax Book says payments "on behalf of" a charity are treated as cash contributions.

I didn't see it.

[JohnH]

See the "Author's Comment" on page 4-16. Located about 1/3 of the way down the left-hand side of the page.

"Any contribution involving the payment of money to or on behalf of a charity is considered a cash contribution..."

[Kram BergGold]

Cash

I handle transactions like this as cash. I believe a letter from the school is required that stipulates waht was given, when and that no benefits were received.

[les grans]

Be careful with the "contemporaneous" requirement for the acknowledgment letter from the school. You know how sluggish any administrative function can be...! Here's the requirement, as explained in the Internal Revenue Code.
I especially like to quote this provision, because in it, the word "acknowledgment" is spelled two different ways. Apparently, Congress doesn't get elected for their spelling, either.

From code section 170:
"Substantiation requirement for certain contributions
(A) General rule
No deduction shall be allowed under subsection (a) for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of subparagraph (B).
(B) Content of acknowledgement
An acknowledgement 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.
(C) Contemporaneous
For purposes of subparagraph (A), an acknowledgment shall be considered to be contemporaneous if the taxpayer obtains the acknowledgment on or before the earlier of -
(i) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or
(ii) the due date (including extensions) for filing such return."

[Black Bart]

...the Tax Book says payments "on behalf of" a charity are treated as cash contributions.

Wonder how ticky the IRS would be about interpretation of that phrase "on behalf of"? Actually, the client himself owed the bill and also paid it for himself (regardless of whether the decision to donate was made before or after purchase). So, legally it was his stuff and his liability, making the subsequent donation to charity a non-cash donation.

For instance, if the donees themselves had already bought the stuff, owed for it, and then your client came along and paid it for them, it could more accurately be said that your client paid for it on behalf of the charity.

[JohnH]

He should be pleased that I insisted that we needed to file an extension, even though he was hot to get it in by Apr 15 so he could receive his rebate. This enables him to actually get the acknowledgement letter prior to the due date for filing his return, even if it takes a couple of months, since his due date is now Oct 15. Once again, I feel vindicated for sticking to my guns when it comes to extensions.