The Tax Court determined the taxpayer was not entitled to a charitable contribution deduction for contributions she made to a public charity she created, where she failed to have the charity issue written acknowledgements of the contributions.
The taxpayer co-founded the charity, was responsible for its finances and had access to its checking accounts. During one year, she made several contributions of more than $250 each. The contributions were made by electronic transfer from her personal bank account to the charity's account. The transfers were reflected in both the taxpayer's and the charity's bank statements, but the charity did not provide any written acknowledgment of the contributions to the taxpayer.
The Tax Court denied the charitable contribution deduction for these contributions because the charity failed to provide the taxpayer with a contemporaneous written acknowledgment required by Internal Revenue Code Section 170(f)(8)(A). The written acknowledgment must not only describe the property contributed but also state whether any goods or services were provided in consideration for the donation. The taxpayer argued that it would be meaningless to write herself an acknowledgement and that the bank statements should suffice to substantiate her contributions. The Tax Court disagreed, finding that the statements do not qualify under Internal Revenue Code Section 170(f)(8)(A) because they do not state whether the taxpayer received any goods or services in exchange for her contributions.
This case highlights that taxpayers need to conform fully to the written acknowledgement requirements in order to benefit from the charitable contribution deduction. This is especially important for clients who have private foundations they created or administer who may not already be aware of these requirements.