Taxpayers may deduct charitable contributions if they meet specific requirements. In Albrecht v. Commissioner; No. 13314-20; T.C. Memo. 2022-53, the Tax Court clarifies these requirements.
Law Regarding Charitable Contributions Over $250
IRC § 170(a)(1) allows deductions for charitable contributions.
For a contribution over $250, IRC § 170(f)(8) requires a contemporaneous written acknowledgement (CWA) from the donee organization which must include the following:
- the amount of cash and a description (but not value) of any property other than cash contributed;
- whether the donee organization provided any goods or services in consideration, in whole or in part, for any such property; and
- a description and good faith estimate of the value of any such goods or services.
The CWA must be received on or before the earlier of the date the taxpayer files her return or the due date for filing such return.
Facts and Court’s Ruling
In this case, the taxpayer donated Native American jewelry and artifacts to the Wheelright Museum. The taxpayer and the museum executed a Deed of Gift.
The issue was whether the second requirement of IRC § 170(f)(8)(B) was met – i.e., did the CWA include whether or not the museum provided any goods or services in consideration of the gift?
The deed did not explicitly state whether the museum provided any goods or services in consideration for the donation. So the court instead looked to the deed as a whole to determine whether the CWA met the second requirement.
In the deed it stated that while the gift was unconditional and irrevocable, “all rights, titles and interests held by the donor in the property are included in the donation, unless otherwise stated in the Gift Agreement.”
Thus, the terms of the deed were subject to a separate agreement (the Gift Agreement) which the taxpayer did not provide. The Tax Court found that “by referencing another document that superseded the terms of the deed with respect to the donor’s rights in the donation, the deed provided the donor with the ability to retain an interest in the donation, including under a potential quid pro quo arrangement.”
Therefore the Tax Court found that the donation did not meet the requirements of section 170(f)(8)(B) and was not deductible.