Charitable, Etc., Contributions and Gifts (I.R.C. 170)

January 8, 2016

Disallowance of Deduction in Certain Cases and Special Rules

Under I.R.C. 170(f)(8), no charitable deduction is allowed for any contribution of $250 or more unless the taxpayer substantiates the contribution by a “contemporaneous written acknowledgment” (CWA) of the contribution by the donee organization.  This CWA is typically the letter provided by the entity receiving the donation.

A CWA must meet certain content requirements and be provided contemporaneously, which means on or before the earlier of (a) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or (b) the due date (including extensions) for filing the return.

There is a statutory exception to the CWA rule – which means the CWA does not need to be provided if the exception is met.  The exception, however, relies on regulations to be promulgated.

Regulations were proposed (REG-138344-13) with respect to this exception, but were criticized as being too burdensome and requiring reporting that could disincentivize charitable giving.  The regulations would have permitted the donee organization to report the donation on the donee’s Form 990.  The proposed regulations were withdrawn in January 2016.  Unless other regulations are substituted, the statutory exception to CWA cannot be used.