Lack of Contribution Support

Posted on Wednesday, June 20, 2012

A couple in Texas was recently disallowed a charitable contribution made to their church due to lack of proper documentation from the church.

The couple filed Schedule A on their 2007 joint income tax return and claimed a deduction of $25,171 for charitable contributions made by cash or check.  Most of the contributions were made to their church and all except for 5 checks were over $250.  The couple provided copies of canceled checks and a letter dated January 10, 2008 from their church acknowledging the contributions from 2007.  The Court did not accept the acknowledgement from the church; however, because it did not include a statement regarding whether any goods or services were provided in return for the contributions.  The couple then provided a letter from their church dated June 21, 2009 that included the same information as the first and also a statement that no goods or services were provided in return for the contributions.  The Court again denied the second letter from the church because it was not contemporaneous. 

A written acknowledgement is contemporaneous if it is obtained by the taxpayer on or before the earlier of (1) the date the taxpayer files the original return for the taxable year of the contribution or (2) the due date (including extensions) for filing the original return for the year.  In this case, both of these dates had passed.

To find out additional information on proper documentation for charitable contributions, check out our earlier blog, Contribution Substantiation.

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

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