Tax deductible contributions

Discuss questions around local unit policies for budgeting, reconciling, etc. This forum should not contain specific financial or membership information.
carlscpa
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Tax deductible contributions

Postby carlscpa » Mon Jun 14, 2010 7:09 pm

The YW in our ward hold an annual bake sale to raise money for Girls Camp. The proceeds are deposited into Other-YW. Since the money is deposited in an "Other" account, it does not appear as a tax deductible item on the year end tithing statement. The amount paid for the baked goods exceeds the fair market value of the goods. The Internal Revenue Code specifies that the excess of the payment over the fair market value is deductible if the taxpayer itemizes their deductions.

We are considering issuing a statement on church stationery and signed by the Bishop to the members buying the baked goods. This statement would indicate the amount paid and would indicate the member needs to determine the fair market value of the goods purchased and only this excess is deductible for tax purposes.

Does this violate any church policies? Any comments or suggestions?

russellhltn
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Postby russellhltn » Mon Jun 14, 2010 7:28 pm

I don't have access to all of the material, but I have to say that I'm not personally comfortable with that. For one thing, having it tax deductible would seem to encourage donations far in excess of the value of the product. The bake sale itself would be little more then a formality.

Also, I think issuing tax receipts without clear guidance from the handbook to be playing with fire. You do not want to come to the attention of the IRS.
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jdlessley
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Postby jdlessley » Mon Jun 14, 2010 7:58 pm

Any tax related information provided in an official document such as a Church letterhead not directed by Church headquarters should be cleared through the Church headquarters first. Contact Tax Administration at 50 East North Temple Street, Room 2223, Salt Lake City, UT 84150-3620. You can also call them at 1-801-240-3003 or 1-800-453-3860 extension 2-3003. There is risk of jepordizing the Church's tax exempt status. Any tax advice provided by any one not a tax lawyer, CPA, or other recognized tax specialist could cause legal problems.
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carlscpa
New Member
Posts: 39
Joined: Sun Mar 30, 2008 4:52 pm
Location: CA USA

Tax deductible contributions

Postby carlscpa » Tue Jun 15, 2010 8:59 am

Thank you for your answer. I will call the number you suggested. I should have mentioned I am a retired IRS Agent as well as a CPA.


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