[PDF] [PDF] Publication 526 (Rev December 2003) - Internal Revenue Service

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Publication 526 (Rev IRS Publication 78, which lists most qualified the rest of this publication for more information and additional rules and limits that may

[PDF] Publication 526 (Rev December 2003) - Internal Revenue Service

This publication explains how to claim a deduc- tion for your charitable contributions It dis- cusses organizations that are qualified to receive deductible  

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You can deduct cluding any allocated overhead) is not States $240 (80 of $300) as a charitable contribution more than $8 60 Page 4 Publication 526 ( 2006) 

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Publication 526 Contents Cat 8283 Noncash Charitable Contributions pub- 78 You can also call the IRS to find out if an Page 2 Publication 526 (2008) 

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the tickets from your payment 80 of the re- gross income from Israeli sources Way maining amount is a charitable contribution Publication 526 (2007)

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rest of this publication for more information and additional rules and limits that may apply value Qualified organizations include nonprofit Deductible As

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This publication discusses organizations that are qualified to receive charitable contribu- tions, the types of contributions you can de- duct, how much you can 

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Publication 526

Contents

(Rev. December 2003)Cat. No. 15050A of theOrganizations That Qualify ToTreasuryReceive Deductible Contributions..2

Charitable

Internal

Contributions You Can Deduct.......3Revenue

Service

Contributions

Contributions You Cannot Deduct.....5

Contributions of Property...........6

When To Deduct.................9

Limits on Deductions..............9

Records To Keep.................12

How To Report...................14

How To Get Tax Help..............15

This publication explains how to claim a deduc-

tion for your charitable contributions. It dis- cusses organizations that are qualified to receive deductible charitable contributions, the types of contributions you can deduct, how much you can deduct, what records to keep, and how to report charitable contributions.

A charitable contribution is a donation or

gift to, or for the use of, a qualified organiza- tion. It is voluntary and is made without getting, or expecting to get, anything of equal value.

Qualified organizations.Qualified organiza-

tions include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to chil- dren or animals. You will find descriptions of these organizations under Organizations That

Qualify To Receive Deductible Contributions.

Form 1040 required.To deduct a charitable

contribution, you must file Form 1040 and item- ize deductions on Schedule A. The amount of your deduction may be limited if certain rules and limits explained in this publication apply to you.

Comments and suggestions.We welcome

your comments about this publication and your suggestions for future editions.

You can e-mail us at *taxforms@irs.gov.

Please put "Publications Comment" on the sub-

ject line.

You can write to us at the following address:

Internal Revenue ServiceIndividual Forms and Publications Branch

SE:W:CAR:MP:T:I

Get forms and other information

1111 Constitution Ave. NW

faster and easier by:

Washington, DC 20224

Internet•www.irs.gov orFTP•ftp.irs.gov

We respond to many letters by telephone.

Therefore, it would be helpful if you would in-

FAX•703-368-9694 (from your fax machine)

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Useful ItemsTable 1.Examples of Charitable Contributions - A Quick Check

You may want to see:Use the following lists for a quick check of contributions you can or cannot deduct.

See the rest of this publication for more information and additional rules and limitsPublicationthat may apply.

?78Cumulative List of OrganizationsDeductible As Not Deductible As Charitable Contributions Charitable Contributions?561Determining the Value of Donated PropertyMoney or property you give to: Money or property you give to:

•Churches, synagogues, temples,•Civic leagues, social and sportsForm (and Instructions)mosques, and other religious clubs, labor unions, and chambers of

?Schedule A (Form 1040)Itemizedorganizations commerce

Deductions

•Federal, state, and local•Foreign organizations (except certain?8283Noncash Charitable Contributionsgovernments, if your contribution is Canadian, Israeli, and Mexican

solely for public purposes (for charities)

See How To Get Tax Help near the end of

example, a gift to reduce the publicthis publication for information about gettingdebt) •Groups that are run for personalthese publications and forms. profit

•Nonprofit schools and hospitals

•Groups whose purpose is to lobby for

•Public parks and recreation facilities law changes

Organizations That

•Salvation Army, Red Cross, CARE,•Homeowners' associations

Goodwill Industries, United Way, Boy

Qualify To Receive

Scouts, Girl Scouts, Boys and Girls

•IndividualsClubs of America, etc.

Deductible

•Political groups or candidates for

•War veterans' groupspublic office

Contributions

Expenses paid for a student living with you, Cost of raffle, bingo, or lottery ticketsYou can deduct your contributions only if yousponsored by a qualified organizationmake them to a qualified organization. To be-Dues, fees, or bills paid to country clubs,come a qualified organization, most organiza-Out-of-pocket expenses when you serve a lodges, fraternal orders, or similar groupstions other than churches and governments, asqualified organization as a volunteerdescribed below, must apply to the IRS.Tuition

Value of your time or services

Publication 78.You can ask any organization

whether it is a qualified organization, and most Value of blood given to a blood bankwill be able to tell you. Or you can check IRS Publication 78, which lists most qualified organi- zations. You may find Publication 78 in your

2)War veterans' organizations, including zation, and your contribution is for a publiclocal library's reference section. Or you can find

posts, auxiliaries, trusts, or foundations, purpose. You can deduct your contribution. it on the Internet at www.irs.gov. You can also

organized in the United States or any of itsExample 2. You make a voluntary contri-call the IRS to find out if an organization is

possessions. bution to the social security trust fund, not qualified. Call 1-877-829-5500. (For TTY/ earmarked for a specific account. Because

TDD help, call 1-800-829-4059.)3)Domestic fraternal societies, orders, andthe trust fund is part of the U.S. Govern-associations operating under the lodge sys-ment, you contributed to a qualified organi-

Types of Qualified

tem.zation. You can deduct your contribution. OrganizationsNote. Your contribution to this type of

organization is deductible only if it is to beExamples.The following list gives some ex-Generally, only the five following types of organi-used solely for charitable, religious, scien-amples of qualified organizations.zations can be qualified organizations.tific, literary, or educational purposes, or for

•Churches, a convention or association ofthe prevention of cruelty to children or ani-1)A community chest, corporation, trust,churches, temples, synagogues,mals. fund, or foundation organized or createdmosques, and other religious organiza-4)Certain nonprofit cemetery companiesin or under the laws of the United States,tions.or corporations.any state, the District of Columbia, or any

•Most nonprofit charitable organizationsNote. Your contribution to this type ofpossession of the United States (includingsuch as the Red Cross and the Unitedorganization is not deductible if it can bePuerto Rico). It must be organized and op-Way.used for the care of a specific lot or mauso-erated only for one or more of the following

leum crypt. purposes.

•Most nonprofit educational organizations,

including the Boy (and Girl) Scouts of5)The United States or any state, the Districta) Religious.America, colleges, museums, andof Columbia, a U.S. possession (includingb) Charitable.day-care centers if substantially all thePuerto Rico), a political subdivision of achild care provided is to enable individualsstate or U.S. possession, or an Indian tribalc) Educational.(the parents) to be gainfully employed andgovernment or any of its subdivisions thatd) Scientific.the services are available to the generalperform substantial government functions.public. However, if your contribution is aNote. To be deductible, your contributione) Literary.substitute for tuition or other enrollmentto this type of organization must be madef) The prevention of cruelty to children orfee, it is not deductible as a charitablesolely for public purposes. animals.contribution, as explained later under Con-Example 1. You contribute cash to yourtributions You Cannot Deduct.Certain organizations that foster nationalcity's police department to be used as a

or international amateur sports competition reward for information about a crime. The

•Nonprofit hospitals and medical research

also qualify. city police department is a qualified organi- organizations.

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•Utility company emergency energy pro- If you give property to a qualified organiza- cluded the purchase of one season ticket for the

grams, if the utility company is an agent tion, you generally can deduct the fair market stated ticket price of $120. You must subtract

for a charitable organization that assists value of the property at the time of the contribu- the usual price of a ticket ($120) from your $300

individuals with emergency energy needs. tion. See Contributions of Property, later. payment. The result is $180. Your deductible

charitable contribution is $144 (80% of $180).

Your deduction for charitable contributions is

•Nonprofit volunteer fire companies.generally limited to 50% of your adjusted grossCharity benefit events.If you pay a qualified

•Public parks and recreation facilities.income, but in some cases 20% and 30% limitsorganization more than fair market value for themay apply. See Limits on Deductions, later.

•Civil defense organizations.right to attend a charity ball, banquet, show,The total of your charitable contributions de-sporting event, or other benefit event, you canduction and certain other itemized deductionsdeduct only the amount that is more than themay be limited. See the instructions for Formvalue of the privileges or other benefits youCanadian charities.You may be able to de-1040 for more information.receive.duct contributions to certain Canadian charita-Table 1 in this publication lists some exam-If there is an established charge for theble organizations covered under an income taxples of contributions you can deduct and someevent, that charge is the value of your benefit. Iftreaty with Canada.that you cannot deduct.there is no established charge, your contributionTo deduct your contribution to a Canadianis that part of your payment that is more than thecharity, you generally must have income from

Contributions From

reasonable value of the right to attend the event.sources in Canada. See Publication 597, Infor-Whether you use the tickets or other privileges

Which You Benefit

mation on the United States-Canada Incomehas no effect on the amount you can deduct.Tax Treaty, for information on how to figure yourIf you receive a benefit as a result of making aHowever, if you return the ticket to the qualifieddeduction. contribution to a qualified organization, you canorganization for resale, you can deduct the en-

deduct only the amount of your contribution thattire amount you paid for the ticket.Mexican charities.You may be able to de-is more than the value of the benefit youduct contributions to certain Mexican charitableEven if the ticket or other evidence ofreceive. Also see Contributions From Whichorganizations under an income tax treaty withpayment indicates that the payment isYou Benefit under Contributions You CannotMexico.a "contribution," this does not mean

CAUTION

Deduct, later.The organization must meet tests that areyou can deduct the entire amount. If the ticketIf you pay more than fair market value to aessentially the same as the tests that qualifyshows the price of admission and the amount ofqualified organization for merchandise, goods,U.S. organizations to receive deductible contri-the contribution, you can deduct the contributionor services, the amount you pay that is morebutions. The organization may be able to tell youamount.than the value of the item can be a charitableif it meets these tests.contribution. For the excess amount to qualify,If not, you can get general informationExample.You pay $40 to see a specialyou must pay it with the intent to make a charita-about the tests the organization mustshowing of a movie for the benefit of a qualifiedble contribution.meet by writing to the:organization. Printed on the ticket is "Contribu-

tion - $40." If the regular price for the movie isExample 1.You pay $65 for a ticket to aInternal Revenue Service$8, your contribution is $32 ($40 payment - $8dinner-dance at a church. All the proceeds of theInternational Returns Sectionregular price).function go to the church. The ticket to theP.O. Box 920dinner-dance has a fair market value of $25.Membership fees or dues.You may be ableBensalem, PA 19020-8518.When you buy your ticket, you know that itsto deduct membership fees or dues you pay to avalue is less than your payment. To figure theTo deduct your contribution to a Mexicanqualified organization. However, you can deductamount of your charitable contribution, you sub-charity, you must have income from sources inonly the amount that is more than the value oftract the value of the benefit you receive ($25)Mexico. The limits described in Limits on Deduc-the benefits you receive. You cannot deductfrom your total payment ($65). You can deducttions, later, apply and are figured using yourdues, fees, or assessments paid to country$40 as a charitable contribution to the church.income from Mexican sources. Those limits alsoclubs and other social organizations. They areapply to all your charitable contributions, as de-not qualified organizations.Example 2.At a fund-raising auction con-scribed in that discussion.Certain membership benefits can be disre-ducted by a charity, you pay $600 for a week'sIsraeli charities.You may be able to deductgarded.Both you and the organization canstay at a beach house. The amount you pay iscontributions to certain Israeli charitable organi-disregard certain membership benefits you getno more than the fair rental value. You have notzations under an income tax treaty with Israel.in return for an annual payment of $75 or less tomade a deductible charitable contribution.To qualify for the deduction, your contributionthe qualified organization. You can pay more

must be made to an organization created and than $75 to the organization if the organizationAthletic events.If you make a payment to, or

recognized as a charitable organization underdoes not require a larger payment for you to getfor the benefit of, a college or university and, as

the laws of Israel. The deduction will be allowedthe benefits. The benefits covered under thisa result, you receive the right to buy tickets to an

in the amount that would be allowed if the organ-rule are:athletic event in the athletic stadium of the col-

ization was created under the laws of the Unitedlege or university, you can deduct 80% of the1) Any rights or privileges, other than thoseStates, but is limited to 25% of your adjustedpayment as a charitable contribution.discussed under Athletic events, earlier,gross income from Israeli sources.If any part of your payment is for ticketsthat you can use frequently while you are a(rather than the right to buy tickets), that part ismember, such as:not deductible. In that case, subtract the price of

the tickets from your payment. 80% of the re-a) Free or discounted admission to themaining amount is a charitable contribution.

Contributions

organization's facilities or events, b) Free or discounted parking, You Can DeductExample 1.You pay $300 a year for mem-

bership in an athletic scholarship program main-c) Preferred access to goods or services,Generally, you can deduct your contributions oftained by a university (a qualified organization).andmoney or property that you make to, or for theThe only benefit of membership is that you have

use of, a qualified organization. A gift or contri- d) Discounts on the purchase of goodsthe right to buy one season ticket for a seat in a bution is "for the use of" a qualified organization and services, anddesignated area of the stadium at the when it is held in a legally enforceable trust for university's home football games. You can de- the qualified organization or in a similar legal 2) Admission, while you are a member, to duct $240 (80% of $300) as a charitable contri- arrangement.events that are open only to members ofbution. The contributions must be made to a quali- the organization if the organization reason-

fied organization and not set aside for use by aExample 2.The facts are the same as in ably projects that the cost per person (ex-

specific person.Example 1 except that your $300 payment in- cluding any allocated overhead) is not

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Underprivileged youths selected by charity.more than a specified amount, which may 2) Is not your dependent or relative, and

You can deduct reasonable unreimbursed

be adjusted annually for inflation. (This is3) Is a full-time student in the twelfth or anyout-of-pocket expenses you pay to allow under-the amount for low-cost articles given inlower grade at a school in the Unitedprivileged youths to attend athletic events, mov-the annual revenue procedure with infla-States.ies, or dinners. The youths must be selected bytion adjusted amounts for the current year.

a charitable organization whose goal is to re-

You can get this figure from the IRS.)You can deduct up to $50 a month forduce juvenile delinquency. Your own similar ex-each full calendar month the studentpenses in accompanying the youths are notToken items.You can deduct your entire pay-lives with you. Any month when condi-

TIP

deductible.ment to a qualified organization as a charitabletions (1) through (3) above are met for 15 or

contribution if both of the following are true. Conventions.If you are a chosen representa-more days counts as a full month.

tive attending a convention of a qualified organi-1) You get a small item or other benefit ofzation, you can deduct unreimbursed expensesQualified organization.For these purposes,token value.for travel and transportation, including a reason-a qualified organization can be any of the organi-able amount for meals and lodging, while awayzations described earlier under Organizations2) The qualified organization correctly deter-from home overnight in connection with the con-That Qualify To Receive Deductible Contribu-mines that the value of the item or benefitvention. However, see Travel, later.tions, except those in (4) and (5). For example, ifyou received is not substantial and informsYou cannot deduct personal expenses foryou are providing a home for a student through ayou that you can deduct your payment insightseeing, fishing parties, theater tickets, orstate or local government agency, you cannotfull.nightclubs. You also cannot deduct travel, mealsdeduct your expenses as charitable contribu-The organization determines whether the valueand lodging, and other expenses for yourtions.of an item or benefit is substantial by usingspouse or children.Revenue Procedures 90-12 and 92-49 andYou cannot deduct your expenses in attend-Qualifying expenses.Expenses that youthe revenue procedure with the inflation ad-ing a church convention if you go only as amay be able to deduct include the cost of books,justed amounts for the current year.member of your church rather than as a chosentuition, food, clothing, transportation, medicalrepresentative. You can deduct unreimbursedand dental care, entertainment, and otherWritten statement.A qualified organizationexpenses that are directly connected with givingamounts you actually spend for the well-being ofmust give you a written statement if you make aservices for your church during the convention.the student.payment to it that is more than $75 and is partlyUniforms.You can deduct the cost and up-a contribution and partly for goods or services.Expenses that do not qualify.Depreciationkeep of uniforms that are not suitable for every-The statement must tell you that you can deducton your home, the fair market value of lodging,day use and that you must wear whileonly the amount of your payment that is moreand similar items are not considered amountsperforming donated services for a charitable or-than the value of the goods or services youspent by you. In addition, general householdganization.received. It must also give you a good faithexpenses, such as taxes, insurance, repairs,estimate of the value of those goods or services.Foster parents.You may be able to deduct asetc., do not qualify for the deduction.The organization can give you the statementa charitable contribution some of the costs ofReimbursed expenses.If you are compen-either when it solicits or when it receives thebeing a foster parent (foster care provider) if yousated or reimbursed for any part of the costs ofpayment from you.have no profit motive in providing the foster carehaving a student living with you, you cannotand are not, in fact, making a profit. A qualifiedException.An organization will not have todeduct any of your costs. However, if you areorganization must designate the individuals yougive you this statement if one of the following isreimbursed for only an extraordinary or atake into your home for foster care.true.one-time item, such as a hospital bill or vacationYou can deduct expenses that meet both oftrip, that you paid in advance at the request ofthe following requirements.1) The organization is:the student's parents or the sponsoring organi-

1) They are unreimbursed out-of-pocket ex-

zation, you can deduct your expenses for thea) The type of organization described inpenses to feed, clothe, and care for thestudent for which you were not reimbursed.(5) under Types of Qualified Organiza-foster child.tions, earlier, orMutual exchange program.You cannot

2) They must be mainly to benefit the quali-

deduct the costs of a foreign student living inb) Formed only for religious purposes, andfied organization.your home under a mutual exchange programthe only benefit you receive is an intan-through which your child will live with a family ingible religious benefit (such as admis-Unreimbursed expenses that you cannot de-a foreign country.sion to a religious ceremony) thatduct as charitable contributions may be consid-generally is not sold in commercialered support provided by you in determiningReporting expenses.For a list of what youtransactions outside the donative con-whether you can claim the foster child as amust file with your return if you deduct expensestext.dependent. For details, see Publication 501, Ex-for a student living with you, see Reporting ex-emptions, Standard Deduction, and Filing Infor-penses for student living with you under How To2) You receive only items whose value is notmation.Report, later.substantial as described under Token

items, earlier.Example.You cared for a foster child be-

Out-of-Pocket Expenses

cause you wanted to adopt her, not to benefit the3) You receive only membership benefits thatagency that placed her in your home. Your un-

in Giving Services

can be disregarded, as described earlier.reimbursed expenses are not deductible asYou may be able to deduct some amounts youcharitable contributions.pay in giving services to a qualified organization.

Expenses Paid for

Church deacon.You can deduct as a charita-The amounts must be:

Student Living With You

ble contribution any unreimbursed expenses

•Unreimbursed,you have while in a permanent diaconate pro-You may be able to deduct some expenses ofgram established by your church. These ex-

•Directly connected with the services,having a student live with you. You can deductpenses include the cost of vestments, books,qualifying expenses for a foreign or American

•Expenses you had only because of theand transportation required in order to serve instudent who:services you gave, andthe program as either a deacon candidate or as

an ordained deacon. •Not personal, living, or family expenses.1) Lives in your home under a written agree- ment between you and a qualified organi-Car expenses.You can deduct unreimbursed

Table 2 contains questions and answers thatzation (defined later) as part of a program out-of-pocket expenses, such as the cost of gas

apply to some individuals who volunteer their of the organization to provide educational and oil, that are directly related to the use of your services. opportunities for the student, car in giving services to a charitable organiza-

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Table 2. Volunteers' Questions and Answers

If you do volunteer work for a qualified organization, the following questions and answers may apply to you. All of the rules explained

in this publication also apply. See, in particular, Out-of-Pocket Expenses in Giving Services.

Question Answer

I do volunteer work 6 hours a week in the office of a qualified No, you cannot deduct the value of your time or services.

organization. The receptionist is paid $6 an hour to do the same work I do. Can I deduct $36 a week for my time? Yes, you can deduct the costs of gas and oil that are directly related to

The office is 30 miles from my home. Can I deduct any of my car getting to and from the place where you are a volunteer. If you do not

expenses for these trips? want to figure your actual costs, you can deduct 14 cents for each mile.

I volunteer as a Red Cross nurse's aide at a hospital. Can I deduct the Yes, you can deduct the cost of buying and cleaning your uniforms if

cost of uniforms that I must wear? the hospital is a qualified organization, the uniforms are not suitable for

everyday use, and you must wear them when volunteering.

I pay a baby sitter to watch my children while I do volunteer work for a No, you cannot deduct payments for child care expenses as a

qualified organization. Can I deduct these costs? charitable contribution, even if they are necessary so you can do

volunteer work for a qualified organization. (If you have child care expenses so you can work for pay, get Publication 503, Child and

Dependent Care Expenses.)

tion. You cannot deduct general repair andExample 3.You work for several hours maintenance expenses, depreciation, registra- each morning on an archeological dig spon-

Contributions

tion fees, or the costs of tires or insurance. sored by a charitable organization. The rest of the day is free for recreation and sightseeing.

If you do not want to deduct your actual

You Cannot Deduct

You cannot take a charitable contribution deduc-expenses, you can use a standard mileage rate tion even though you work very hard during

of 14 cents a mile to figure your contribution.There are some contributions you cannot de-those few hours.You can deduct parking fees and tolls,duct. There are others you can deduct only partwhether you use your actual expenses or theof.Example 4.You spend the entire day at-standard mileage rate.You cannot deduct as a charitable contribu-tending a charitable organization's regionalYou must keep reliable written records ofmeeting as a chosen representative. In the eve-tion:your car expenses. For more information, seening you go to the theater. You can claim yourCar expenses under Records To Keep, later.travel expenses as charitable contributions, but1) A contribution to a specific individual,

you cannot claim the cost of your evening at theTravel.Generally, you can claim a charitable2) A contribution to a nonqualified organiza-theater.contribution deduction for travel expenses nec-tion,essarily incurred while you are away from homeDaily allowance (per diem).If you provide3) The part of a contribution from which youperforming services for a charitable organizationservices for a charitable organization and re-only if there is no significant element of per-receive or expect to receive a benefit,ceive a daily allowance to cover reasonablesonal pleasure, recreation, or vacation in thetravel expenses, including meals and lodging4) The value of your time or services,travel. This applies whether you pay the ex-while away from home overnight, you must in-penses directly or indirectly. You are paying the 5) Your personal expenses,clude in income the amount of the allowanceexpenses indirectly if you make a payment to thethat is more than your deductible travel ex-6)Appraisal fees, orcharitable organization and the organizationpenses. You can deduct your necessary travel7) Certain contributions of partial interestspays for your travel expenses.expenses that are more than the allowance.in property.The deduction for travel expenses will not beDeductible travel expenses.These in-denied simply because you enjoy providingDetailed discussions of these items follow.clude:services to the charitable organization. Even if

you enjoy the trip, you can take a charitable

•Air, rail, and bus transportation,

Contributions to Individuals

contribution deduction for your travel expenses

•Out-of-pocket expenses for your car,if you are on duty in a genuine and substantialYou cannot deduct contributions to specific indi-sense throughout the trip. However, if you have

•Taxi fares or other costs of transportationviduals, including:only nominal duties, or if for significant parts ofbetween the airport or station and yourthe trip you do not have any duties, you cannothotel,

•Contributions to fraternal societies madededuct your travel expenses.for the purpose of paying medical or burial

•Lodging costs, andexpenses of deceased members.Example 1.You are a troop leader for a •The cost of meals.tax-exempt youth group and you help take the

•Contributions to individuals who are needyBecause these travel expenses are notgroup on a camping trip. You are responsible foror worthy. This includes contributions to abusiness-related, they are not subject to theoverseeing the set up of the camp and for pro-qualified organization if you indicate thatsame limits as business related expenses. Forviding adult supervision for other activities dur-your contribution is for a specific person.information on business travel expenses, seeing the entire trip. You participate in the activitiesBut you can deduct a contribution that youTravel Expenses in Publication 463, Travel, En-of the group and really enjoy your time withgive to a qualified organization that in turntertainment, Gift, and Car Expenses.them. You oversee the breaking of camp andhelps needy or worthy individuals if you doyou help transport the group home. You cannot indicate that your contribution is for adeduct your travel expenses.specific person.

Example. You can deduct contributionsExample 2.You sail from one island to an-earmarked for flood relief, hurricane relief,other and spend 8 hours a day counting whalesor other disaster relief to a qualified organi-and other forms of marine life. The project is

zation. However, you cannot deduct contri-sponsored by a charitable organization. In most butions earmarked for relief of a particular circumstances, you cannot deduct your ex- individual or family. penses.

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•Payments to a member of the clergy that•The value of income lost while you work

Contributions From

can be spent as he or she wishes, such as as an unpaid volunteer for a qualified or-

Which You Benefit

for personal expenses.ganization. If you receive or expect to receive a financial or

•Expenses you paid for another person who

economic benefit as a result of making a contri-provided services to a qualified organiza-

Personal Expenses

bution to a qualified organization, you cannottion. deduct the part of the contribution that repre- Example. Your son does missionary work.You cannot deduct personal, living, or family sents the value of the benefit you receive. See You pay his expenses. You cannot claim aexpenses, such as the following items. deduction for your son's unreimbursed ex-

Contributions From Which You Benefit under

•The cost of meals you eat while youpenses related to his contribution of serv-Contributions You Can Deduct, earlier. These

perform services for a qualified organiza-ices.contributions include:tion, unless it is necessary for you to be

•Payments to a hospital that are for a spe-

•Contributions for lobbying. This includesaway from home overnight while perform-cific patient's care or for services for aamounts that you earmark for use in, or ining the services.specific patient. You cannot deduct theseconnection with, influencing specific legis-

•Adoption expenses, including fees paidpayments even if the hospital is operatedlation.to an adoption agency and the costs ofby a city, state, or other qualified organiza-

•Contributions to a retirement home thatkeeping a child in your home before adop-tion.are clearly for room, board, maintenance,tion is final. However, you may be able to

or admittance. Also, if the amount of your claim a tax credit for these expenses. Contributions tocontribution depends on the type or size ofAlso, you may be able to exclude from apartment you will occupy, it is not a chari- your gross income amounts paid or reim-

Nonqualified Organizations

table contribution. bursed by your employer for your adoption

You cannot deduct contributions to organiza-

expenses. See Publication 968, Tax Bene-

•Costs of raffles, bingo, lottery, etc. Youtions that are not qualified to receive tax-deduct-fits for Adoption, for more information. Youcannot deduct as a charitable contributionible contributions, including the following.also may be able to claim an exemptionamounts you pay to buy raffle or lotteryfor the child. See Adoption in Publicationtickets or to play bingo or other games of1)Certain state bar associations if:501 for more information.chance. For information on how to reporta) The state bar is not a political subdivi-gambling winnings and losses, see De-sion of a state,ductions Not Subject to the 2% Limit in

Appraisal Fees

Publication 529.b) The bar has private, as well as public,Fees that you pay to find the fair market value ofpurposes, such as promoting the pro-

•Dues to fraternal orders and similardonated property are not deductible as contribu-fessional interests of members, andgroups. However, see Membership fees ortions. You can claim them, subject to thedues under Contributions From Which Youc) Your contribution is unrestricted and2%-of-adjusted-gross-income limit, as a miscel-Benefit, earlier.can be used for private purposes.laneous itemized deduction on Schedule A

(Form 1040). See Deductions Subject to the 2%

•Tuition, or amounts you pay instead of2)Chambers of commerce and other busi-Limit in Publication 529 for more information.tuition, even if you pay them for children toness leagues or organizations.attend parochial schools or qualifying non-

profit day-care centers. You also cannot

Partial Interest3)Civic leagues and associations.

deduct any fixed amount you may be re- in Property

4)Communist organizations.quired to pay in addition to the tuition fee

to enroll in a private school, even if it is

5)Country clubs and other social clubs.Generally, you cannot deduct a contribution of

designated as a "donation."

less than your entire interest in property. For6)Foreign organizations other than:details, see Partial interest in property under

•Contributions connected with split-dol-Contributions of Property, later.a) A U.S. organization that transfers fundslar insurance arrangements. You cannotto a charitable foreign organization ifdeduct any part of a contribution to a chari-the U.S. organization controls the use

table organization if, in connection with theof the funds or if the foreign organiza-contribution, the organization directly or in-tion is only an administrative arm of the

Contributionsdirectly pays, has paid, or is expected toU.S. organization, orpay any premium on any life insurance,

of Property annuity, or endowment contract for whichb) Certain Canadian, Israeli, or Mexican

you, any member of your family or any othercharitable organizations. See CanadianIf you contribute property to a qualified organiza-person chosen by you (other than a quali-charities, Mexican charities, and Israelition, the amount of your charitable contributionfied charitable organization) is a benefi-charities under Organizations Thatis generally the fair market value of the prop-ciary.Qualify To Receive Deductible Contri-erty at the time of the contribution. However, ifbutions, earlier.Example. You donate money to a charita-the property has increased in value, you mayble organization. The charity uses thehave to make some adjustments to the amount7)Homeowners' associations.money to purchase a cash value life insur-of your deduction. See Giving Property That Hasance policy. The beneficiaries under the8)Labor unions. But you may be able toIncreased in Value, later.insurance policy include members of yourdeduct union dues as a miscellaneousFor information about the records you mustfamily. Even though the charity may even-itemized deduction, subject to thekeep and the information you must furnish withtually get some benefit out of the insurance2%-of-adjusted-gross-income limit, onyour return if you donate property, see Recordspolicy, you cannot deduct any part of theSchedule A (Form 1040). See PublicationTo Keep and How To Report, later.donation.529, Miscellaneous Deductions.

9)Political organizations and candidates.

Contributions Subject toValue of Time or ServicesSpecial Rules

You cannot deduct the value of your time orSpecial rules apply if you contributed:services, including:

•Property subject to a debt,

•Blood donations to the Red Cross or to

blood banks, and

•A partial interest in property,

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•A future interest in tangible personal prop- amount of your contribution deduction from your1) A remainder interest in your personal homeopening inventory. It is not part of the cost oferty, oror farm. A remainder interest is one thatgoods sold.

•Inventory from your business.passes to a beneficiary after the end of anIf the cost of donated inventory is not in-earlier interest in the property.cluded in your opening inventory, the inventory'sThese special rules are described next.Example. You keep the right to live inbasis is zero and you cannot claim a charitableyour home during your lifetime and givecontribution deduction. Treat the inventory'sProperty subject to a debt.If you contributeyour church a remainder interest that beginscost as you would ordinarily treat it under yourproperty subject to a debt (such as a mortgage),upon your death. method of accounting. For example, include theyou must reduce the fair market value of thepurchase price of inventory bought and donated2) An undivided part of your entire interest.property by:in the same year in the cost of goods sold for thatThis must consist of a part of every substan-year.tial interest or right you own in the property1) Any allowable deduction for interest thatand must last as long as your interest in theyou paid (or will pay) attributable to anyproperty lasts.

Determining

period after the contribution, andExample. You contribute voting stock to

Fair Market Value

2) If the property is a bond, the lesser of:a qualified organization but keep the right to

vote the stock. The right to vote is a sub-

This section discusses general guidelines fora) Any allowable deduction for intereststantial right in the stock. You have notdetermining the fair market value of variousyou paid (or will pay) to buy or carry thecontributed an undivided part of your entiretypes of donated property. Publication 561 con-bond that is attributable to any periodinterest and cannot deduct your contribu-tains a more complete discussion.before the contribution, ortion. Fair market value is the price at which prop-

b) The interest, including bond discount,

erty would change hands between a willing3) A partial interest that would be deductiblereceivable on the bond that is attributa-buyer and a willing seller, neither having to buyif transferred in trust.ble to any period before the contribu- or sell, and both having reasonable knowledge

4) A qualified conservation contribution (de-of all the relevant facts.tion, and that is not includible in your

fined under Qualified conservation contri-income due to your accounting method.Used clothing.The fair market value of usedbution in Publication 561).clothing and other personal items is usually farThis prevents a double deduction of the sameFor information about how to figure the valueless than the price you paid for them. There areamount as investment interest and also as aof a contribution of a partial interest in property,no fixed formulas or methods for finding thecharitable contribution.see Partial Interest in Property Not in Trust invalue of items of clothing.If the debt is assumed by the recipient (orPublication 561.You should claim as the value the price thatanother person), you must also reduce the fairbuyers of used items actually pay in used cloth-Future interest in tangible personal property.market value of the property by the amount ofing stores, such as consignment or thrift shops.You can deduct the value of a charitable contri-the outstanding debt.bution of a future interest in tangible personalHousehold goods.The fair market value ofIf you sold the property to a qualified organi-property only after all intervening interests inused household goods, such as furniture, appli-zation at a bargain price, the amount of the debtand rights to the actual possession or enjoymentances, and linens, is usually much lower thanis also treated as an amount realized on the saleof the property have either expired or beenthe price paid when new. These items may haveor exchange of property. For more information,turned over to someone other than yourself, alittle or no market value because they are in asee Bargain Sales under Giving Property Thatrelated person, or a related organization.worn condition, out of style, or no longer useful.Has Increased in Value, later.Related persons include your spouse, chil-For these reasons, formulas (such as using a

dren, grandchildren, brothers, sisters, and par-percentage of the cost to buy a new replacementPartial interest in property.Generally, youents. Related organizations may include aitem) are not acceptable in determining value.cannot deduct a charitable contribution (notpartnership or corporation that you have an in-You should support your valuation with pho-made by a transfer in trust) of less than yourterest in, or an estate or trust that you have atographs, canceled checks, receipts from yourentire interest in property.connection with.purchase of the items, or other evidence. Maga-

Right to use property.A contribution of thezine or newspaper articles and photographs thatTangible personal property.This is anyright to use property is a contribution of less thandescribe the items and statements by the recipi-property, other than land or buildings, that canyour entire interest in that property and is notents of the items are also useful. Do not includebe seen or touched. It includes furniture, books,deductible.any of this evidence with your tax return.jewelry, paintings, and cars.If the property is valuable because it is old or

Future interest.This is any interest that isExample 1.You own a 10-story office build-unique, see the discussion under Paintings, An-

to begin at some future time, regardless of ing and donate rent-free use of the top floor to atiques, and Other Objects of Art in Publication whether it is designated as a future interest charitable organization. Since you still own the561.

under state law.building, you have contributed a partial interestCars, boats, and aircraft.If you contribute ain the property and cannot take a deduction forcar, boat, or aircraft to a charitable organization,Example.You own an antique car that youthe contribution.you must determine its fair market value.contribute to a museum. You give up ownership,Certain commercial firms and trade organi-but retain the right to keep the car in your garageExample 2.Mandy White owns a vacationzations publish used car pricing guides, com-with your personal collection. Since you keep anhome at the beach that she sometimes rents tomonly called "blue books," containing completeinterest in the property, you cannot deduct theothers. For a fund-raising auction at her church,dealer sale prices or dealer average prices forcontribution. If you turn the car over to the mu-she donated the right to use the vacation homerecent model years. The guides may be pub-seum in a later year, giving up all rights to itsfor 1 week. At the auction, the church receivedlished monthly or seasonally, and for differentuse, possession, and enjoyment, you can take aand accepted a bid from Lauren Green equal toregions of the country. These guides also pro-deduction for the contribution in that later year.the fair rental value of the home for 1 week.vide estimates for adjusting for unusual equip-Mandy cannot claim a deduction because of theInventory.If you contribute inventory (prop- ment, unusual mileage, and physical condition.partial interest rule. Lauren cannot claim a de-erty that you sell in the course of your business), The prices are not "official" and these publica-duction either, because she received a benefitthe amount you can claim as a contribution de- tions are not considered an appraisal of anyequal to the amount of her payment. See Contri-duction is the smaller of its fair market value on specific donated property. But they do providebutions From Which You Benefit, earlier.the day you contributed it or its basis. The basis clues for making an appraisal and suggest rela-

Exceptions.You can deduct a charitableof donated inventory is any cost incurred for the tive prices for comparison with current sales and

contribution of a partial interest in property only if inventory in an earlier year that you would other- offerings in your area. that interest represents one of the following wise include in your opening inventory for the These publications are sometimes available listed items. year of the contribution. You must remove the from public libraries, or from the loan officer at a

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bank, credit union, or finance company. You can For more information about what is a capitalOrdinary Income Property

asset, see chapter 2 of Publication 544.also find used car pricing information on theProperty is ordinary income property if its sale atInternet.Amount of deduction - general rule.Whenfair market value on the date it was contributedExcept for inexpensive small boats, the valu-figuring your deduction for a gift of capital gainwould have resulted in ordinary income or ination of boats should be based on an appraisalproperty, you usually can use the fair marketshort-term capital gain. Examples of ordinaryby a marine surveyor because the physical con-value of the gift.income property are inventory, works of art cre-dition is critical to the value.ated by the donor, manuscripts prepared by theExceptions.However, in certain situations,donor, and capital assets (defined later, underExample.You donate your car to a localyou must reduce the fair market value by anyCapital Gain Property) held 1 year or less.high school for use by students studying auto-amount that would have been long-term capital

mobile repair. Your credit union told you that the gain if you had sold the property for its fairProperty used in a trade or business. "blue book" value of the car is $1,600. However, market value. Generally, this means reducingProperty used in a trade or business is consid- your car needs extensive repairs and, after the fair market value to the property's cost orered ordinary income property to the extent of

other basis. You must do this if:some checking, you find that you could sell it forany gain that would have been treated as ordi-

$750. You can deduct $750, the true fair marketnary income because of depreciation had the1) The property (other than qualified appreci-value of the car, as a charitable contribution.property been sold at its fair market value at theated stock) is contributed to certain privatetime of contribution. See chapter 3 of Publicationnonoperating foundations,544, Sales and Other Dispositions of Assets, forLarge quantities.If you contribute a large

the kinds of property to which this rule applies. number of the same item, fair market value is the2) The contributed property is tangible per- price at which comparable numbers of the item sonal property that is put to an unrelated Amount of deduction.The amount you canare being sold.use by the charity, or

deduct for a contribution of ordinary income3) You choose the 50% limit instead of theExample.You purchase 500 bibles forproperty is its fair market value less the amount30% limit, discussed later.$1,000. The person who sells them to you saysthat would be ordinary income or short-term

the retail value of these bibles is $3,000. If you

capital gain if you sold the property for its fairContributions to private nonoperatingcontribute the bibles to a qualified organization,market value. Generally, this rule limits the de-foundations.The reduced deduction appliesyou can claim a deduction only for the price atduction to your basis in the property.to contributions to all private nonoperating foun-which similar numbers of the same bible aredations other than those qualifying for the 50%Example.You donate stock that you heldcurrently being sold. Your charitable contribu-limit, discussed later.for 5 months to your church. The fair markettion is $1,000, unless you can show that similarHowever, the reduced deduction does notvalue of the stock on the day you donate it isnumbers of that bible were selling at a differentapply to contributions of qualified appreciated$1,000, but you paid only $800 (your basis).price at the time of the contribution.stock. Qualified appreciated stock is any stock inBecause the $200 of appreciation would bea corporation that is capital gain property and forshort-term capital gain if you sold the stock, your

Giving Property That

which market quotations are readily available ondeduction is limited to $800 (fair market valuean established securities market on the day of

Has Decreased in Value

less the appreciation).the contribution. But stock in a corporation does If you contribute property with a fair market value not count as qualified appreciated stock to theException.Do not reduce your charitable that is less than your basis in it, your deduction is extent you and your family contributed morecontribution if you include the ordinary or capital

limited to its fair market value. You cannot claim than 10% of the value of all the outstandinggain income in your gross income in the same

stock in the corporation. a deduction for the difference between theyear as the contribution. See Ordinary or capital property's basis and its fair market value.

gain income included in gross income underContributions of tangible personal prop-Capital Gain Property, next, if you need moreYour basis in property is generally what youerty.The term tangible personal propertyinformation.paid for it. If you need more information aboutmeans any property, other than land or build-basis, get Publication 551, Basis of Assets. Youings, that can be seen or touched. It includesmay want to get Publication 551 if you contributefurniture, books, jewelry, paintings, and cars.

Capital Gain Property

property that you:The term unrelated use means a use that is unrelated to the exempt purpose or function ofProperty is capital gain property if its sale at fair

•Received as a gift or inheritance,the charitable organization. For a governmentalmarket value on the date of the contribution

•Used in a trade, business, or activity con-unit, it means the use of the contributed propertywould have resulted in long-term capital gain.ducted for profit, orfor other than exclusively public purposes.Capital gain property includes capital assets

held more than 1 year. •Claimed a casualty loss deduction for.Example.If a painting contributed to an ed-

ucational institution is used by that organizationCommon examples of property that de-Capital assets.Capital assets include mostfor educational purposes by being placed in itscreases in value include clothing, furniture, ap-items of property that you own and use for per-library for display and study by art students, thepliances, and cars. sonal purposes or investment. Examples of cap-use is not an unrelated use. But if the painting isital assets are stocks, bonds, jewelry, coin orsold and the proceeds are used by the organiza-stamp collections, and cars or furniture used for

Giving Property That

tion for educational purposes, the use is anpersonal purposes.unrelated use.

Has Increased in Value

For purposes of figuring your charitable con-

tribution, capital assets also include certain real

Ordinary or capital gain income included inIf you contribute property with a fair market valueproperty and depreciable property used in yourgross income.You do not reduce your chari-that is more than your basis in it, you may havetrade or business and, generally, held more thantable contribution if you include the ordinary orto reduce the fair market value by the amount1 year. (You may have to treat this property ascapital gain income in your gross income in theof appreciation (increase in value) when youpartly ordinary income property and partly capi-same year as the contribution. This may happenfigure your deduction.tal gain property.)when you transfer installment or discount obliga-Your basis in property is generally what youtions or when you assign income to a charitablepaid for it. If you need more information aboutReal property.Real property is land andorganization. If you contribute an obligation re-basis, get Publication 551.generally anything that is built on, growing on, orceived in a sale of property that is reportedattached to land.Different rules apply to figuring your deduc-under the installment method, see Publicationtion, depending on whether the property is:Depreciable property.Depreciable prop-537, Installment Sales.

erty is property used in business or held for the1) Ordinary income property, orproduction of income and for which a deprecia-Example.You donate an installment note to

2) Capital gain property. tion deduction is allowed.

a qualified organization. The note has a fair

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market value of $10,000 and a basis to you of If your contribution would be undone by a1) The value or adjusted basis claimed onlater act or event, you cannot take a deduction.$7,000. As a result of the donation, you have ayour return is 200% or more of the correctBut if there is only a negligible chance the act orshort-term capital gain of $3,000 ($10,000 -amount, andevent will take place, you can take a deduction.$7,000), which you include in your income for

the year. Your charitable contribution is

2) You underpaid your tax by more thanExample 1.You donate cash to a local$10,000.$5,000 because of the overstatement.school board, which is a political subdivision of a

state, to help build a school gym. The school

40% penalty.The penalty is 40%, rather thanboard will refund the money to you if it does not

Bargain Sales

20%, if:collect enough to build the gym. You cannot

A bargain sale of property to a qualified organi-

deduct your gift as a charitable contribution until1) The value or adjusted basis claimed onthere is no chance of a refund.zation (a sale or exchange for less than theyour return is 400% or more of the correctproperty's fair market value) is partly a charita-amount, andExample 2.You donate land to a city for asble contribution and partly a sale or exchange.

long as the city uses it for a public park. The city2) You underpaid your tax by more thandoes plan to use the land for a park, and there isPart that is a sale or exchange.The part of$5,000 because of the overstatement.no chance (or only a negligible chance) of thethe bargain sale that is a sale or exchange mayland being used for any different purpose. Youresult in a taxable gain. For more information oncan deduct your charitable contribution.

determining the amount of any taxable gain, see

Bargain sales to charity in chapter 1 of Publica-

When To Deduct

tion 544.

You can deduct your contributions only in the

Limits on Deductions

Part that is a charitable contribution.Figureyear you actually make them in cash or otherthe amount of your charitable contribution inproperty (or in a succeeding carryover year, asIf your total contributions for the year are 20% orthree steps.explained under How To Figure Your Deductionless of your adjusted gross income, you do not

When Limits Apply, later). This applies whetherneed to read this section. The limits discussedStep 1.Subtract the amount you received

you use the cash or an accrual method of ac- here do not apply to you.for the property from the property's fair market counting. The amount of your deduction is limited tovalue at the time of sale. This gives you the fair

50% of your adjusted gross income, and may bemarket value of the contributed part.

limited to 30% or 20% of your adjusted grossTime of making contribution.Usually, youStep 2.Find the adjusted basis of the con-income, depending on the type of property youmake a contribution at the time of its uncondi-tributed part. It equals:give and the type of organization you give it to.tional delivery.

These limits are described below.Checks.A check that you mail to a charity isIf your contributions are more than any of theconsidered delivered on the date you mail it.limits that apply, see Carryovers under How To

Figure Your Deduction When Limits Apply, later.Credit card.Contributions charged on your bank credit card are deductible in the year you

Adjusted basis of

entire propertyFair market value of contributed part

Fair market value

of entire property

Out-of-pocket expenses.Amounts youmake the charge.spend performing services for a charitable or-Step 3.Determine whether the amount ofPay-by-phone account.If you use aganization, which qualify as charitable contribu-your charitable contribution is the fair marketpay-by-phone account, the date you make ations, are subject to the limit of the organization.value of the contributed part (which you found incontribution is the date the financial institutionFor example, the 50% limit applies to amountsStep 1) or the adjusted basis of the contributedpays the amount. This date should be shown onyou spend on behalf of a church, a 50% limitpart (which you found in Step 2). Generally, if thethe statement the financial institution sends toorganization. These amounts are considered aproperty sold was capital gain property, youryou.contribution to a qualified organization.charitable contribution is the fair market value of

Stock certificate.The gift to a charity of athe contributed part. If it was ordinary incomeproperly endorsed stock certificate is completed

50% Limit

property, your charitable contribution is the ad-on the date of mailing or other delivery to thejusted basis of the contributed part. See theThe 50% limit applies to the total of all charitablecharity or to the charity's agent. However, if youordinary income property and capital gain prop-contributions you make during the year. Thisgive a stock certificate to your agent or to theerty rules (discussed earlier) for more informa-means that your deduction for charitable contri-issuing corporation for transfer to the name oftion.butions cannot be more than 50% of your ad-the charity, your gift is not completed until the

justed gross income for the year.date the stock is transferred on the books of theExample.You sell ordinary income propertycorporation.with a fair market value of $10,000 to a churchOnly limit for 50% organizations.The 50%for $2,000. Your basis is $4,000 and your ad-Promissory note.If you issue and deliver alimit is the only limit that applies to gifts to orga-justed gross income is $20,000. You make nopromissory note to a charitable organization asnizations listed below under 50% Limit Organi-other contributions during the year. The fair mar-a contribution, it is not a contribution until youzations. But there is one exception.ket value of the contributed part of the propertymake the note payments.Exception.A 30% limit also applies to theseis $8,000 ($10,000 - $2,000). The adjusted ba-Option.If you grant an option to buy realgifts if they are gifts of capital gain property forsis of the contributed part is $3,200 ($4,000 ×property at a bargain price to a charitable organi-which you figure your deduction using fair mar-($8,000 ÷ $10,000)). Because the property iszation, you cannot take a deduction until theket value without reduction for appreciation.ordinary income property, your charitable contri-organization exercises the option.(See Special 30% Limit for Capital Gain Prop-bution deduction is limited to the adjusted basiserty, later.)Borrowed funds.If you make a contribu-of the contributed part. You can deduct $3,200.tion with borrowed funds, you can deduct the

contribution in the year you make it, regardless

Penalty

50% Limit Organizations

of when you repay the loan.

You may be liable for a penalty if you overstate

Conditional gift.If your contribution is a You can ask any organization whether it is athe value or adjusted basis of donated property.conditional gift that depends on a future act or 50% limit organization, and most will be able to

event that may not take place, you cannot take a tell you. Or you may check IRS Publication 78

20% penalty.The penalty is 20% of thededuction. But if there is only a negligible(described earlier).

amount by which you underpaid your tax be- chance that the act or event will not take place, Only the following types of organizations are cause of the overstatement, if: you can take a deduction. 50% limit organizations.

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fund's income within 2 1 /2 months following

How To Figure

1) Churches, and conventions or associa-the tax year in which it was realized and

Your Deduction

tions of churches.must distribute the corpus not later than 1

When Limits Apply

year after the donor's death (or after the2) Educational organizations with a regulardeath of the donor's surviving spouse if thefaculty and curriculum that normally have aIf your contributions are subject to more thanspouse can name the recipients of theregularly enrolled student body attendingone of the limits just discussed, you can deductcorpus).classes on site.them as follows.

3) Hospitals and certain medical research or-1) Contributions subject only to the 50%

30% Limitgquotesdbs_dbs6.pdfusesText_11