Saturday, February 22 2014
Charitable Contributions From Which You Benefit. If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive.
If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. For excess amount to qualify, taxpayer must pay it with the intent to make a charitable contribution.
Example 1. You pay $75 to a ticket to a dinner-dance at a church. Your entire $75 payment goes to the church. The ticket to the dinner-dance has a fair market value of $25. When you buy your ticket, you know that its value is less than your payment. To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from the total payment ($75). You can deduct $50 as a contribution to the church.
Example 2. At a fundraising auction conducted by a charity, you pay $500 for a week's stay at a beach house. The amount you pay is no more than the fair rental value. You have not made a deductible charitable contribution.
For Athletic Events. If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the university or college, you can deduct 80% of the payment you made as a charitable contribution.
If any part of your payment is for tickets rather than the right to buy tickets, that part is not deductible. Subtract the price of the tickets from your payment. You can deduct 80% of the remaining amount as your charitable contribution for the same tax year.
For Charity Benefit Events. If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive.
If there is an established charge for the event, that charge is the value of your benefit. If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit which you can claim as a charitable contribution. Whether you use the tickets or other privileges has no effect on the amount you can deduct. However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount on which you paid for the ticket.