Ullmann & Company, PC
Noncash Gifts to Charity Under Fire

During 2015, the IRS won at least three cases, Kunkel, Jalloh, and Smith, involving noncash charitable contributions in which the written acknowledgements received by the donors did not meet the requirements. While each of the cases involved large contribution amounts, their reasoning could jeopardize the noncash charitable contribution deductions of many individuals.
In the case of a noncash charitable contribution valued at $250 or more, the Tax Code requires a contemporaneous acknowledgement from the donee organization that includes a description (but not value) of the property contributed and a statement of whether the donee organization provided any goods or services in exchange for the gift (and the value of those goods or services provided if applicable).
The taxpayer in each case attempted to satisfy the contemporaneous acknowledgement requirement with generic receipts provided by the charitable organizations that were either blank or did not contain a description of the property donated. The Court held that these receipts did not contain enough information to satisfy the requirements. In Kunkel, the taxpayer also asserted that the total amount claimed as noncash contributions to charities represented multiple donations in different batches, each of less than $250 worth of goods, so no acknowledgements were necessary. The Court, noting that this would have required the taxpayer to make donations on 97 occasions, found that the taxpayer’s assertion was not credible and disallowed the deduction.
Source:  Kunkel, T.C. Memo. 2015-71; Jallah, T.C. Summ. 2015-18; and Smith, T.C. Memo. 2014-203.  The Tax Adviser September 2016

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