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Saturday, February 04, 2006


Anyone who made a charitable contribution of $250 or more in 2005 should be checking to make sure they received back a qualified receipt from the charity. Without that receipt, the charitable deduction will be denied, even if other proof of payment is offered.

And you can't afford to wait until audit to get the receipt - the receipt must be obtained by the earlier of when you file your income tax return or the due date for the return.

How do you know if your receipt is in correct form? The receipt should contain the following information and statements:

(1) the amount of cash and a description (but not the value) of any property other than cash contributed;

(2) whether the donee organization provided any goods or services in consideration, in whole or in part, for the contribution;

(3) a description and good-faith estimate of the value of those goods or services, or, if the goods or services consist entirely of intangible religious benefits, a statement to that effect.

Most public charities will provide you with these receipts without request, but they may not all be on the ball and you may need to request one. Further, if the contribution is to a family-controlled charity, you will need to issue one through the charity. Note that contributions to split-interest (charitable lead and charitable remainder trusts) generally do not require this receipt.

Does the IRS get into the nitty-gritty of whether a receipt contains all the required information? Ask Betty Kendrix. She recently lost a case in Tax Court where some of her receipts did not include all the required language and thus was not allowed a charitable deduction. Betty Kendrix v. Commissioner, TC Memo 2006-9.

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