Why is this Topic Important to Wealth Managers? This blogticle reviews the general requirements for the deductibility of donations for federal income tax purposes. Our goal is to provide information for wealth mangers to stay current on relevant topics including charitable contributions.
The Internal Revenue Code allows for deductions for federal income tax purposes of contributions or gifts made to or for the use of an organization that qualifies as a federally tax-exempt organization. 
For a charitable contribution to be deductible, the charity must receive some benefit from the donated property;  and the donor cannot expect to receive some economic benefit (aside from the tax deduction) from the charity in return for the donation. 
However, a charitable deduction is not allowed for any contribution of a check, cash, or other monetary gift unless the donor retains a bank record or a written communication from the charity showing the name of the charity and the date and the amount of the contribution. 
Charitable contributions of $250 or more (whether in cash or property) generally must be substantiated by a contemporaneous written acknowledgment of the contribution supplied by the charitable organization. 
For contributions of property other than money, the taxpayer is generally required to maintain a receipt from the donee organization showing the name of the donee, the date and location of the contribution, and a description of the property. The value need not be stated on the receipt. 
A deduction for a contribution of property with a claimed value exceeding $500 will generally be denied to any individual, partnership, or corporation that fails to satisfy the property description and appraisal requirements. 
However, there are two exceptions to the general rule. Under the first exception, the appraisal requirements, for property valued at more than $5,000 and at more than $500,000, do not apply to readily valued property, such as cash and publicly traded securities. Under the second exception, the general rule does not apply if it is shown that the failure to meet the requirements is due to reasonable cause and not to willful neglect. 
As a general matter, in order for contributions to be deductible, the organization must qualify at the time of the contribution. Thus, it is the responsibility of an organization receiving contributions to ensure that its character, purposes, activities, and method of operation satisfy the qualification requirements under the Code in order for grantors and contributors to have the assurance that their contributions at the time made are deductible.
Generally, Publication 78 lists organizations that have received a ruling or determination letter from the IRS stating that contributions by grantors or contributors to the listed organization (or to the listed central (or parent) organization and those local (or subordinate) units covered by the group exemption letter) are deductible as provided in § 170.
Moreover the law has been interpreted so that grantors and contributors may generally rely on an organization’s ruling that the organization is described until the IRS publishes notice of a change of status (for example, in the Internal Revenue Bulletin or Publication 78), unless the grantor or contributor was responsible for, or aware of, the act or failure to act that results in the organization’s loss of public charity status. 
Tomorrow’s blogticle will discuss insurance topics related to estate and gift tax planning.
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See IRC Sec. 170.
 See Winthrop v. Meisels, 180 F.Supp. 29 (DC NY 1959), aff’d 281 F.2d 694 (2d Cir. 1960).
 See Stubbs v. U.S., 70-2 USTC ¶9468 (9th Cir.), cert. den. 400 U.S. 1009 (1971).
 IRC Sec. 170(f)(17), as added by PPA 2006.
 IRC Sec. 170(f)(8)(A).
 Treas. Reg. §1.170A-13(b)(1).
 IRC Sec. 170(f)(11)(A)(i).
 IRC Sec. 170(f)(11)(A)(ii).
 See generally Temporary Regulations §§ 1.170A-9T(f)(5)(ii) and 1.509(a)-3T(e)(2), 73 Fed. Reg. 52,528 (Sept. 9, 2008).