Feb 1, 2011 12:00 PM

By Laura H. Peebles, tax director in the Washington, D.C. office of Deloitte Tax LLP

Tax benefits are a notable “side effect” of philanthropy (in addition to the satisfaction of leaving the world a better place). Subject to various limits not discussed here, a deduction is allowed that can reduce a donor's income tax. Indeed, that generous tax deduction is one of the benefits of being a U.S. taxpayer.

However, what the Code giveth, the Code can take away as well. Recent case law and Internal Revenue Service audit activity has reminded us that there are specific conditions to fulfill to obtain the tax benefits promised. Two of those conditions are donor acknowledgment letters and qualified appraisals. The law is quite clear that without an acknowledgement letter from the charity giving the date and amount of the donation and the value of any benefits received in return, the deduction for the donation is simply disallowed. That letter must be in hand by the earlier of the date of filing of the return or the due date of the return. (Of course, the donor must also have evidence of the donation itself, such as a credit card receipt, stock transfer record or cancelled check.) If the donor doesn't obtain the letter by the due date of the return, the donor can't remedy the omission later.

Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
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Topics of Interest

Estate Tax	Donor Advised Funds
GSTs	Family Offices
Private Foundations	Life Insurance
2010 Tax Act News	Industry Trends Surveys

E-Newsletter Signup

2011 Trust Glossary

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50 Years Ago This Month

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50 years ago, in May 1962, we featured articles such as: "Future of Canadian Trusteeship" by Arthur H. Mingay", "Training Trust Employees" by Ian M. Marr, "What is a Trust Officer?" by Eric J. Brown, and "Selling Services" by Donald I. Webb.

Conrad Teitell's Guide to Tax Benefits For Charitable Gifts

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