| Author |
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Larry
Guest
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 Posted:
Sun Sep 25, 2005 12:00 am Post subject:
What contributions are deductable? |
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My son's rowing club, an official non-profit, is selling
coupon books for $15. They cost us $7. Can the $8 over the
cost be claimed by purchasers as contributions.
If not $8, than anything? I don't know why $8 is an issue,
but I was asked to look into this...
Thanks.
Moderator: See Pub 526.
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Herb Smith
Guest
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| Posted:
Mon Sep 26, 2005 12:00 am Post subject:
Re: What contributions are deductable? |
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Larry wrote:
| Quote: | My son's rowing club, an official non-profit, is selling
coupon books for $15. They cost us $7. Can the $8 over the
cost be claimed by purchasers as contributions.
If not $8, than anything? I don't know why $8 is an issue,
but I was asked to look into this...
|
Not all "non-profits" are charitable organizations or
qualify to accept tax deductible contributions. If your
organization has not applied for and received 501(c)3
recognition from the IRS, I do not believe there is any
deductible donation here. Besides, the purchaser is
supposedly receiving something of value for his
"contribution".
Many social and sports clubs are officially "non-profits",
but unless they have a charitable purpose beyond their
social or sports purpose, contributions/donations are NOT
tax deductible.
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Stuart A. Bronstein
Guest
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| Posted:
Mon Sep 26, 2005 12:00 am Post subject:
Re: What contributions are deductable? |
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"Larry" <Larry@larry.com> wrote:
| Quote: | My son's rowing club, an official non-profit, is selling
coupon books for $15. They cost us $7. Can the $8 over the
cost be claimed by purchasers as contributions.
|
Probably not. For contributions to be deductible the
nonprofit has to be a 501(c)(3) nonprofit. A rowing club is
probably something else.
Stu
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Phil Marti
Guest
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| Posted:
Mon Sep 26, 2005 12:00 am Post subject:
Re: What contributions are deductable? |
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"Larry" <Larry@larry.com> wrote:
| Quote: | My son's rowing club, an official non-profit, is selling
coupon books for $15. They cost us $7. Can the $8 over the
cost be claimed by purchasers as contributions.
|
Not enough information. Assuming that the organization is a
qualified charitable contribution destination, the
applicable comparison is $15 against what those coupons get
the purchaser. How much the organization paid for them is
irrelevant.
--
Phil Marti
Clarksburg, MD
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Seth Breidbart
Guest
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| Posted:
Mon Sep 26, 2005 8:00 am Post subject:
Re: What contributions are deductable? |
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Phil Marti <prm20871@verizon.net> wrote:
| Quote: | "Larry" <Larry@larry.com> wrote:
My son's rowing club, an official non-profit, is selling
coupon books for $15. They cost us $7. Can the $8 over the
cost be claimed by purchasers as contributions.
Not enough information. Assuming that the organization is a
qualified charitable contribution destination, the
applicable comparison is $15 against what those coupons get
the purchaser. How much the organization paid for them is
irrelevant.
|
I'd think the comparison is $15 against the usual retail
price (actually, "fair market value") of the coupon book. I
agree that the wholesale price the organization paid is
irrelevant.
Seth
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Guest
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| Posted:
Wed Sep 28, 2005 4:00 pm Post subject:
Re: What contributions are deductable? |
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"Larry" <Larry@larry.com> wrote:
| Quote: | The "value" of the book is pretty vague; if you manage to
use all the coupons it is worth hundreds, if you toss it as
useless it is worthless. The only firm number is what we pay
for it.
|
My interpretation of the applicable statutes is that
deductibility is based on a cost benefit analysis.
So that if you buy ticket for a $100 a plate dinner
sponsored by a tax exempt organization, your charitable
deduction is $100 less their allocated cost of the event,
i.e., somewhere between $50 and $70 - and they can tell
you how much that is.
Now there's a $30,000 car being raffled off by a local
501(c)(3). They are selling 1000 tickets at $100 each.
My take is that if you win the car, you have at least a
$29,900 tax event and if you fo not win you have a $70
charitable deduction since your ticket was worth ($30,000
divided by the 1,000 tickets sold.
Now to your book. Let us be economists and make assumptions.
You paid X for the book and the book has a maximum value of
$600. Your benefit exceeds your cost do you get no deduction.
Want a deduction - just give them the money and let them keep
the book.
Dick
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Stuart A. Bronstein
Guest
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| Posted:
Wed Sep 28, 2005 4:00 pm Post subject:
Re: What contributions are deductable? |
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|
"Phil Marti" <prm20871@verizon.net> wrote:
| Quote: | "Larry" <Larry@larry.com> wrote:
I still don't have a clear idea of what this coupon book
is, but it's starting to sound like a collection of
discount/promotion coupons that is not normally sold. I'm
totally at sea as to who puts it together and sells it to
the charity, which then sells it for more than it paid for it.
|
They're common in California - even get sold at Costco.
Retailers (especially restaurants) pay for ads with coupons
(generally two for one) that go into a book that gets sold
to the public.
| Quote: | In any case, it sounds very much like the end buyer has no
charitable deduction, since the value of the goods and
services "purchased" is more than the cost of the coupon book.
|
The books are not only sold for charitable purposes. So the
sale price is faire market value. So you're right, no deduction.
Stu
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Larry
Guest
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| Posted:
Wed Sep 28, 2005 4:00 pm Post subject:
Re: What contributions are deductable? |
|
|
"Stuart A. Bronstein" <spamtrap@lexregia.com> wrote:
| Quote: | "Larry" <Larry@larry.com> wrote:
My son's rowing club, an official non-profit, is selling
coupon books for $15. They cost us $7. Can the $8 over the
cost be claimed by purchasers as contributions.
Probably not. For contributions to be deductible the
nonprofit has to be a 501(c)(3) nonprofit. A rowing club is
probably something else.
|
I couldn't remember the designation, but yes, we are a
501(c)(3) and donations are deductible.
The "value" of the book is pretty vague; if you manage to
use all the coupons it is worth hundreds, if you toss it as
useless it is worthless. The only firm number is what we pay
for it.
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<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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<< The Charter and the Guidelines for submitting >>
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Phil Marti
Guest
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| Posted:
Wed Sep 28, 2005 4:00 pm Post subject:
Re: What contributions are deductable? |
|
|
"Larry" <Larry@larry.com> wrote:
| Quote: | The "value" of the book is pretty vague; if you manage to
use all the coupons it is worth hundreds, if you toss it as
useless it is worthless. The only firm number is what we pay
for it.
|
I still don't have a clear idea of what this coupon book
is, but it's starting to sound like a collection of
discount/promotion coupons that is not normally sold. I'm
totally at sea as to who puts it together and sells it to
the charity, which then sells it for more than it paid for it.
In any case, it sounds very much like the end buyer has no
charitable deduction, since the value of the goods and
services "purchased" is more than the cost of the coupon book.
--
Phil Marti
Clarksburg, MD
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<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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Phil Marti
Guest
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| Posted:
Fri Sep 30, 2005 8:00 am Post subject:
Re: What contributions are deductable? |
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|
"Dick Adams" <rdadams@smart.net)> wrote:
| Quote: | Now there's a $30,000 car being raffled off by a local
501(c)(3). They are selling 1000 tickets at $100 each.
My take is that if you win the car, you have at least a
$29,900 tax event and if you fo not win you have a $70
charitable deduction since your ticket was worth ($30,000
divided by the 1,000 tickets sold.
|
While that may seem logical, it's wrong. Raffle tickets are
specifically excluded from any charitable contribution
deduction.
--
Phil Marti
Clarksburg, MD
Moderator: Thanks, Phil. I almost told Susan to buy a ticket.
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<< The foregoing is intended for educational purposes only >>
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Harlan Lunsford
Guest
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| Posted:
Fri Sep 30, 2005 8:00 am Post subject:
Re: What contributions are deductable? |
|
|
Dick Adams wrote:
| Quote: | "Larry" <Larry@larry.com> wrote:
The "value" of the book is pretty vague; if you manage to
use all the coupons it is worth hundreds, if you toss it as
useless it is worthless. The only firm number is what we pay
for it.
My interpretation of the applicable statutes is that
deductibility is based on a cost benefit analysis.
So that if you buy ticket for a $100 a plate dinner
sponsored by a tax exempt organization, your charitable
deduction is $100 less their allocated cost of the event,
i.e., somewhere between $50 and $70 - and they can tell
you how much that is.
|
But unless they publicize to everyone the allocation, and
best place to do so is on the ticket itself, no deduction.
| Quote: | Now there's a $30,000 car being raffled off by a local
501(c)(3). They are selling 1000 tickets at $100 each.
My take is that if you win the car, you have at least a
$29,900 tax event and if you fo not win you have a $70
charitable deduction since your ticket was worth ($30,000
divided by the 1,000 tickets sold.
|
Close but no cigar, Dick. Absent fair market value of the
car of course, the gross income is 30,000$. You get the
deduction only if you itemize on schedule a.
| Quote: | Now to your book. Let us be economists and make assumptions.
You paid X for the book and the book has a maximum value of
$600. Your benefit exceeds your cost do you get no deduction.
|
Correct!. BTW, these coupon hawkers generally mail the
coupons to household in envelopes, but when the opportunity
presents itself, will bind them together in a little booklet
and sell them to churches, organizations, even legitimate
charities.
OTOH, your argument about being "economists and making
assummptions" is SO logical that it defies tax illogic,
don't you think? (grin)
| Quote: | Want a deduction - just give them the money and let them keep
the book.
|
Heartily agree!
ChEAr$,
Harlan
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<< and does NOT constitute legal OR professional advice. >>
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Brew1
Guest
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| Posted:
Fri Sep 30, 2005 8:00 am Post subject:
Re: What contributions are deductable? |
|
|
Dick Adams wrote:
<snip>
| Quote: | My interpretation of the applicable statutes is that
deductibility is based on a cost benefit analysis.
So that if you buy ticket for a $100 a plate dinner
sponsored by a tax exempt organization, your charitable
deduction is $100 less their allocated cost of the event,
i.e., somewhere between $50 and $70 - and they can tell
you how much that is.
Now there's a $30,000 car being raffled off by a local
501(c)(3). They are selling 1000 tickets at $100 each.
My take is that if you win the car, you have at least a
$29,900 tax event and if you fo not win you have a $70
charitable deduction since your ticket was worth ($30,000
divided by the 1,000 tickets sold.
snip |
money spent on raffle tickets is not deductible, regardless
of the organization.
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<< and does NOT constitute legal OR professional advice. >>
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Seth Breidbart
Guest
|
| Posted:
Fri Sep 30, 2005 4:00 pm Post subject:
Re: What contributions are deductable? |
|
|
Dick Adams <rdadams@smart.net)> wrote:
| Quote: | My interpretation of the applicable statutes is that
deductibility is based on a cost benefit analysis.
So that if you buy ticket for a $100 a plate dinner
sponsored by a tax exempt organization, your charitable
deduction is $100 less their allocated cost of the event,
i.e., somewhere between $50 and $70 - and they can tell
you how much that is.
|
So if the restaurant donates the dinner you get a deduction
of $100? I don't think so; I think fair market value of the
meal (what the restaurant would _normally_ charge) is what
matters.
| Quote: | Now there's a $30,000 car being raffled off by a local
501(c)(3). They are selling 1000 tickets at $100 each.
My take is that if you win the car, you have at least a
$29,900 tax event
|
Assuming the car is really worth $30,000 (not "lists for")
and that you bought only one ticket.
| Quote: | and if you fo not win you have a $70
charitable deduction since your ticket was worth ($30,000
divided by the 1,000 tickets sold.
|
Again, assuming $30K is the value of the car.
| Quote: | Now to your book. Let us be economists and make assumptions.
You paid X for the book and the book has a maximum value of
$600. Your benefit exceeds your cost do you get no deduction.
|
What does "maximum value" have to do with anything?
Seth
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<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
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Seth Breidbart
Guest
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| Posted:
Fri Sep 30, 2005 4:00 pm Post subject:
Re: What contributions are deductable? |
|
|
Phil Marti <prm20871@verizon.net> wrote:
| Quote: | I still don't have a clear idea of what this coupon book
is, but it's starting to sound like a collection of
discount/promotion coupons that is not normally sold.
|
http://www.entertainment.com sells such books.
| Quote: | I'm totally at sea as to who puts it together and sells it
to the charity, which then sells it for more than it paid
for it.
|
Presumably, it's a company doing that. Some such companies
might sell only to charities, others sell retail to the
public as well.
| Quote: | In any case, it sounds very much like the end buyer has no
charitable deduction, since the value of the goods and
services "purchased" is more than the cost of the coupon book.
|
If the public retail price is $25, and the charity sells the
book for $50, then I say there's a deduction for $25. The
fact that the coupons in the book could have a total value
of $5,000 if they were all used is irrelevant.
Seth
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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Lanny K Williams CPA
Guest
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| Posted:
Sat Oct 01, 2005 8:00 am Post subject:
Re: What contributions are deductable? |
|
|
Seth Breidbart wrote:
| Quote: | Dick Adams <rdadams@smart.net)> wrote:
My interpretation of the applicable statutes is that
deductibility is based on a cost benefit analysis.
So that if you buy ticket for a $100 a plate dinner
sponsored by a tax exempt organization, your charitable
deduction is $100 less their allocated cost of the event,
i.e., somewhere between $50 and $70 - and they can tell
you how much that is.
So if the restaurant donates the dinner you get a deduction
of $100? I don't think so; I think fair market value of the
meal (what the restaurant would _normally_ charge) is what
matters.
|
No, I think you have this backward. If the person buys the
ticket for $100, he gets a charitable deduction for the
amount in excess of the usual charge. So, if the meal is
listed for $60 on the menu, that is the value of what he
receives for his $100. If so, he has a contribution to the
charity for the excess -- $40.
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
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<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
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