Can $250 be $249?

Client who itemizes donates $250 to charity. Has a cancelled check for it. Doesn't, can't or won't contact charity for the required contemporaneous written acknowledgment. Tells me to just deduct $249. Is that permitted?

170(f)(8)(A)

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).

My read is that technically no deduction is allowable. However, the return could be extended to buy the Taxpayer time to get the contemporaneous documentation.

His reply is he won't claim a deduction

for any contribution of $250 or more

.

What his fed/state marginal rate? Tell him that seeking out the contemporaneous substantiation is worth $X of tax. If he still says no, then sounds good to me.

In a hypothetical audit of your hypothetical client the examiner spots a $249 cash donation on schedule A and wants to see proof. Your hypothetical client presents the $250 check and cannot produce proof of a $249 donation. What then?

In a hypothetical audit of your hypothetical client the examiner spots a $249 cash donation on schedule A and wants to see proof. Your hypothetical client presents the $250 check and cannot produce proof of a $249 donation. What then?

I would hope that the charity provided a benefit of $1 to the taxpayer, and that that would reduce the "contribution" to $249, allowing the deduction. Not saying it would, but that would be my first thought to substantiate the deduction under audit.

Maybe so, but that doesn't answer Len's hypothetical question.

Your hypothetical client presents the $250 check and cannot produce proof of a $249 donation. What then?. Did I say "hypothetical"? :-}

Client would tell agent that he gave $250 but simply wishes to deduct $249, which is less than and included within $250.

My initial thought was that the $249 deduction should be allowed, since the cancelled check is evidence of the contribution and less than $250 is claimed as a deduction. But apparently not. Reg. 1.170A-13(f) states: "No deduction is allowed under Section 170(a) for all or part of any contribution of $250 or more unless the taxpayer substantiates the contribution with a contemporaneous written acknowledgment from the donee organization."

Maybe so, but that doesn't answer Len's hypothetical question.

Right, I don't think that there's an answer on audit other than you concede the issue or you find a way to turn that $250 check into what constitutes a "contribution" of less than $250.

Post #9 seems to do me in. The benefit, if any, provided by the charity may include, without affecting the deduction, an intangible religious benefit (but the charity has to say so in its acknowledgment). Not sure where that leaves the real or hypothetical client.

Thinking out loud, I'm wondering if the TP has a good enough argument for a return position that the charity's depositing the check meets the test...

Thinking out loud, I'm wondering if the TP has a good enough argument for a return position that the charity's depositing the check meets the test...

The payment could be for anything is the problem.

What is the definition of “contribution?”

In a hypothetical audit of your hypothetical client the examiner spots a $249 cash donation on schedule A and wants to see proof. Your hypothetical client presents the $250 check and cannot produce proof of a $249 donation. What then?

Can it be a hypothetical contribution of $249 plus another hypothetical contribution of $1 just paid all in one check or transaction?

2 contributions there.


Or could it be 250 hypothetical contributions of $1 each all paid in the same transaction?

His reply is he won't claim a deduction

for any contribution of $250 or more

.

So he gets no deduction. So what? Why are you trying so hard for a client who doesn't provide the necessary info?

It's how I roll.

What is the definition of “contribution?”. Will this do?

A charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or ex- pecting to get, anything of equal value.

. From the unofficial Pub 526.

Will this do?

Ok. Then who is to say what thing – or things – the check was for?

Lacking a proper acknowledgment, all we have is the donor's assertion, which we have no reason to doubt.