I spent a 44+ year career with pretty much every part of IRS examination division functions, retiring as a team coordinator of large case examinations, including that of some of the largest public companies on Long Island.
The IRS is well aware of the fact that there are charitable organizations out there that will state virtually anything on their letterhead statements in their attempt to compete to get donations. There are organizations that will value unsorted trash bags of non-descript clothing to be worth thousands and cars barely worth a few hundred dollars as metal scrap to be worth just under the $5,000 amount requiring an appraisal, like its amazing as to how many donated cars to a specific organization were stated at 4,995. It's that type of abuse that causes changes in IRS regulations and documentation requirements.
Though a letter of contribution value and statement of value received is required, it's amazing how many religios organization provide letters stating amounts paid qualify as charitable contributions to an IRS 503 organization, when the amounts involved are non-qualifying children's tuition. The IRS looks to not get involved in any discussion of religious issues or political questions, but they do look to verify compliance as to value received, no matter the nature of the organization.
In the situation you have expressed here, upon IRS examiner would most likely , if doing their job properly, would look to determine the value of facility rental charged by other non-related entities for similar facilities and on that basis, disallow the contribution, despite the letter, Whether or not that determination would be worthy of appeal would be a matter for consideration if documentation could be obtained to refute the IRS findings, however that is not always so simple.
I just thought I would help to clarify the situation, though I am sure there are those that differ in opinion.
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Howard Silverman
Enrolled Agent
silvermantaxconsult@gmail.com516-302-5455
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Original Message:
Sent: 03-27-2025 08:05 AM
From: Gus Hatzistefanidis
Subject: Charitable contribution
Hi James,
Lets not forget that when you make a charitable contribution and receive goods and services in return, you must deduct the value of the goods and services.
For example, if you buy a piece of artwork or even a Playstation at a chartity auction that has a value of $500, and the price paid was $1000, you should only be deducting $500 as a charitable contribution.
I don't know what the value of their services there is but I've had the IRS examine clients who have historically given high amounts of charitable contributions and they usually request the receipts at that point.
With that being said, have the couple request a donation letter from the organization as you mentioned. I would go with what the letter indicates as the value of the services to deduct. Keep a copy of that letter for your records as well and in the event of an audit, present that donation letter.
I have clients who donate 60k-90k a year in charitable contributions with no issue but that is usual behavior for them, a one time event may trigger an audit.
Use this information to make your own informed decision on how to proceed.
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Gus Hatzistefanidis
CPA
KONSTANTINOS HATZISTEFANIDIS, CPA
Flushing NY
718-204-8992
Original Message:
Sent: 03-26-2025 05:17 PM
From: James I Greebel
Subject: Charitable contribution
Hello Everyone
I truly appreciate the help from you guys/gals with the answers to my questions
I have a client whose daughter is getting married, and the place they are holding the wedding
at is a museum and a tax exempt organization...They said that a payment that he makes to
them for the use of the building could qualify as a donation and the organization will give a
letter saying that no goods or services were provided for that donation(15K). Would this
really qualify as a donation and be tax deductible?
I don't believe that to be true
Thank you
James Greebel