Tax Court Sustains IRS Strict Interpretation Of Charitable Acknowledgement Rules

  • by:
  • Source: Forbes
  • 04/09/2021
One of the things that I am moderately fanatical about is getting good charitable contribution acknowledgements for my clients.  Also when I have been involved with not-for-profits, I have endeavored to make sure that they have sent out good acknowledgements.  It is not exactly rocket science.  The Code requires that for contributions of $250 or more there must be a "contemporaneous written acknowledgement" that includes:

(i) The amount of cash and a description (but not value) of any property other than cash contributed.

(ii) Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i) .

(iii) A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.

"Contemporaneous" means that you have to have the written acknowledgement in your hot little hand at the earlier of the filing of your return or its due date including extensions.

The Tax Court had bad news for 15 West 17th Street LLC about how strict that rule is. Very, very strict.  The donee organization, the Trust for Architectural Easements went to great lengths to make up for neglecting to include the no goods and services language in its acknowledgement letter to no avail.  The claimed contribution was $64,490,000.  Ouch ! This is a great example of Reilly's Fourth Law of Tax Planning - Execution isn't everything but its a lot.  As it happens, losing the case they way they did may be not the worst result for the 15 West members, but that requires some explaining.  The case has other significance, possibly constitutional, so there may be an appeal.
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