Make sure you get your written confirmation of donation! – Cell Phone Flex Cable Manufacturer

The IRS and Congress has gotten much more aggressive in requiringproper documentation of a charitable donation in excess of $250. Without this documentation, the IRS has the right to completelydeny the deduction even though the taxpayer has a cancelled checkAND a letter from the charity. In order for the deduction to beallowed, the documentation must generally include the followinginformation: The amount of cash donated (if any), A description of any property other than cash that was donated (anestimate of the value of said noncash property is not required), Whether the charity provided any goods or services in exchange forthe donation (other than intangible religious benefits), and A description and good-faith estimate of the value of any goods andservices provided by the charity in exchange for the donation. Also, the taxpayer needs to receive this before filing theirreturn. Replace iPhone LCD Screen

The most often error that we see is the second item. Many times,the taxpayer will get a listing from the church of all of theirdonations, but this statement is not included. If this tax returnwas audited, the taxpayer would stand a good chance of losing thededuction. A recent Tax Court case underlines how much this can cost thetaxpayer. In Marshall Cohan case (TC Memo 2012-8), the taxpayertransferred a first right of refusal on valuable property onMartha’s Vineyard in exchange for cash and other assets that werevalue at less than fair market value. Cell Phone Flex Cable Manufacturer

This difference was valuedat $2 million by the taxpayer and charity. The charity provided awritten acknowledgement to the taxpayer of what was transferred tothe taxpayer, but for some reason did not completely list theassets that the taxpayer transferred to the charity. The Tax Court agreed with the IRS that the whole $2 milliondeduction was disallowed and in addition agreed that the taxablegain should have been $15 million instead of the $9 reported. Bad! It also appeared that the taxpayer and the charity were playingaudit lottery on purposely not reporting all of the items, so theCourt agreed that the 20% negligence penalty also applied. DoubleBad!! Something as little as not completely listing property transferredon a charity transfer can cost taxpayers a large amount of money. Cell Phone LCD Screens Manufacturer


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