Background. The rules for substantiating charitable contributions of $250 or more that took effect in 1994 continue to cause confusion. The IRS issued proposed regulations last year that address some of the questions that have arisen. The public was invited to comment on these regulations, and the IRS recently released final regulations based in part on these comments. There are a few provisions in the final regulations that will be of interest to church treasurers, and they are summarized and illustrated in this article.
Key point. Familiarity with the final regulations will help church treasurers properly credit and receipt charitable contributions.
Intent to make a charitable contribution. For many years, the IRS has ruled that persons who receive goods or services in exchange for a payment to a charity are eligible for a charitable contribution deduction only with respect to the amount by which their payment that exceeds the fair rental value of the goods or services they received. The final regulations add an additional condition—donors may not claim a charitable contribution in such a case unless they intended to make a payment in excess of the fair market value of the goods or services.