The Internal Revenue Service prohibits a charitable contribution deduction of $250.00 or more, unless the taxpayer substantiates this contribution by a contemporaneous written acknowledgement of the contribution by the donor organization.
The contemporaneous written acknowledge must include:
- The amount of cash and a description (but not the value) of any property;
- Whether the donor organization provided any goods or services in consideration for the contribution; and
- A description and good faith estimate of the value of any goods or services received.
The United States Tax Court recently ruled that any charitable contribution of $250.00 or more made to a private foundation requires the written contemporaneous acknowledgement for it to be considered deductible by the donor for income tax purposes, even if the donor is a founder, trustee, or officer of the foundation. In the recent case, Villareale v. Commissioner, T.C. Memo 2013-74, the Tax Court held that a written contemporaneous acknowledgement was required from the foundation in order for the IRS to determine the deductibility of the amount reported by the donor as a charitable contribution.
For more on the Villareale case and the contemporaneous acknowledgment of charitable contributions, please click here.