We have previously reported on several cases where deductions for charitable gifts were disallowed because the taxpayer did not have the required substantiation for the gift. In 2013 alone, there were at least a half dozen cases where the taxpayer lost a charitable contribution deduction only for lack of substantiation.
The required substantiation depends on the amount of the gift and whether it is cash or other property. All contributions of $250 or more require the donor to obtain a contemporaneous written acknowledgement of the gift from the donee. The written acknowledgement must state the amount of any cash gift and a description of any property that was given.The donee must also state whether the donor received any goods or services and a good faith estimate of the value of such goods or services. For gifts of property that are more than $5,000, the donor must obtain a qualified appraisal. Additional requirements apply if the value of the property exceeds $500,000 or if the contributed property is art.
Please be sure that you obtain all required substantiation before you file your income tax return and that you attach all the required forms to your income tax return. You should contact us or your return preparer if you have any questions about the substantiation required for a particular gift.