Charitable Donations Flashcards
What Section deals with itemized deductions for charitable contributions?
§170
contributions to a charity are allowed provided they are operated for one of these 5 main purposes
(1) religious, (2) charitable, (3) literary, (4) scientific, (5) educational (also amateur sports and prevention of cruelty to children/animals)
besides typical charities, donations to these 3 types of entities are allowed provided they are made exclusively for charitable/public purposes
(1) Government, (2) fraternal order or lodge, (3) an organization for war veterans or nonprofit cemetery.
Three examples of activities that donations to are not deductible
(1) political
(2) lobbying
(3) against public policy (bob jones University)
If a charity has a fundraising dinner with tickets costing $300, and the value of the dinner being $50 (the benefit to the donor) how much can he deduct?
$250 - This is true even if the donor just bought a ticket but didn’t attend the dinner.
A taxpayer is limited to the value of 50 percent of their AGI for charitable deductions. How do they treat values in excess of this amount?
they can carry the value forward five years and it may be taken as a charitable donation in those years.
What percent of taxabe income are coroprations limited to?
10 percent
What percent of taxabe income are coroprations limited to?
10 percent
What do you do with donations of appreciated property and what is the wierd thing about this?
They deduct the value of the property they contribute despite the fact they and the charity will never be taxed on the appreciation.
Ottawa Silica v. United States:
Ottawa Silica, a mining company, donated 50 acres of land to local community to build a school. They knew the city would have to build roads to the highschool which would increase the value of Ottawa’s other properties. Court would not allow deduction for value of land donated because §170 requires contribution be made for exclusively public purpose (no substantial benefit to donor)
Bob Jones University v. United States:
university had racially discriminatory policies and IRS revoked its tax exempt stautus. To qualify for tax exempt status, an institution must be charitable in that its policies must not be contrary to public policy.
