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Deductibility of Designated Contributions

IRS says contributions meant for specific individuals aren't deductible.

The IRS has clarified the deductibility of contributions that "earmark" a specific individual. Many churches have collected special offerings for the benefit of a particular individual. For example, a church collects an offering to help pay the medical expenses of a person with a catastrophic and uninsured illness. Or, a church collects an offering to benefit an unemployed family, or a family whose house has been destroyed by fire or some other disaster. Are such "designated" offerings tax-deductible as charitable contributions by the donors? This has been a very difficult question to answer. The problem is that charitable contributions are tax-deductible only to the extent that they are made to a tax-exempt organization. The IRS ruled in 1962:

If contributions to the fund are earmarked by the donor for a particular individual, they are treated, in effect, as being gifts to the designated ...

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Posted:
  • January 1, 1993

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