Charitable Donations Value Guide – Paul Gaulkin CPA

rocks together spelling charityWhen making charitable donations, it is important to understand the rules the IRS will use to value the donation.

If a charitable contribution is made in property, the amount of the contribution is normally the fair market value of the property at the time of the contribution. The fair market value is generally regarded as the price at which the property would exchange between a willing buyer and a willing seller, with both having reasonable knowledge of the relevant facts.

Benefits Received

If the taxpayer receives some benefit in return for payment to a charitable organization, the deduction is reduced by the value of the benefit received.

When a charitable organization sponsors charity events and events of this nature, it is a presumption that the price of admission is not a gift, and that the payment is for an item of value. The burden of proof is generally on the taxpayer to show that the amount paid exceeds the fair market value of any admission to such an event.

The fact that the full payment or a portion of the payment made by the taxpayer is used by the organization exclusively for charitable purposes has no bearing upon the determination to be made as to the value of the admission or the amount qualifying as a contribution. This is because even though the taxpayer has given money to a charitable organization, that organization has given the taxpayer admission to an event that may be worth the same value as the donation.

University Donations

Taxpayers who make a payment to a college or university for the right to purchase tickets to an athletic event are entitled to deduct only 80 percent of the payment as a charitable deduction regardless of whether the tickets would have been available without making the payment.

Unreimbursed Expenses

Unreimbursed expenses which were paid to render services to a charitable organization may constitute a deductible contribution. These expenses include expenditures for meals and lodging while away from home in the course of performing donated services.

Automobile Expenses

Automobile expenses incurred in travelling to perform charitable services are deductible according to the IRS. A standard mileage rate of $.14 per mile or the actual expenses of operating the automobile may be used.

In addition, a taxpayer can add both parking fees and tolls to either method that is used for the expenses.

About Paul Gaulkin CPA

Paul Gaulkin is a Certified Public Accountant and enrolled with the U.S. Treasury to practice before the IRS. Mr. Gaulkin possesses unique technical knowledge in the process of securing relief for taxpayers nationwide with IRS and State tax problems. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.


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