Legal Developments

Contributions that Refer to the Donor’s Name

The IRS clarifies the deductibility of these donations.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1992-05-01 Recent Developments

Charitable Contributions

Richard R. Hammar, J.D., LL.M., CPA

• The IRS clarified the deductibility of “contributions” that refer to the name of the donor. For many years, there has been some question regarding the deductibility of gifts that name the donor. For example, many churches honor large donations by inscribing the name of the donors on a memorial plaque. Such gifts often are associated with building programs, or with a donor’s payment of a substantial portion of the purchase price of a particular item (e.g., stained glass windows, a church organ). Does mentioning a donor’s name in such a way affect the deductibility of the gift? The argument could be made that it does, since a charitable contribution (to be tax-deductible) must be a transfer without any expectation of a return benefit. Does the public disclosure, for many years to come, of the donor’s identity on a memorial plaque constitute a “benefit” received in exchange for the gift that nullifies a charitable contribution deduction? The IRS said no, in a recent news release. The IRS observed: “Payments an exempt organization receives from donors are nontaxable contributions where there is no expectation that the organization will provide a substantial return benefit. Mere recognition of a … contributor as a benefactor normally is incidental to the contribution and not of sufficient value to the contributor to [preclude a charitable contribution deduction]. Examples of mere recognition [that do not nullify a charitable contribution deduction] are naming a … building after a benefactor … ” IRS News Release IR-92-4.

© Copyright 1992, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m08 c0392

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