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Presented by:
Linda LHote, Associate Vice Chancellor Campaign Administration, Advancement Services & Donor Relations and Wayne Chipman, Executive Director for Advancement Office of Gift Planning & Endowments
Panel of Experts
Kyle Newell-Groshong Lead Accountant , Accounting Services General ledger (PeopleSoft), Government Accounting Standards Board (GASB), University financial policies and procedures, reconciling information by
PeopleSoft/Advance
Donna Steinmetz Sr. Fiscal Analyst, Gift & Pledge Processing Compliance Gift Processing Tom Boren Director, Advancement Services Technology & Information Support Group (TISG) and Biographical Records Penny Blank Director, University Donor Relations
Disclaimer
Wayne and I are NOT:
Practicing attorneys Tax advisors Giving legal advice
What is a Gift?
IRS defines a charitable contribution as a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get anything of equal value.
IRS Publication 526
Voluntary, etc.
Voluntary not like an exchange transaction There must be Donative Intent Given without the expectation of receiving something of value in return that is outside quid pro quo and/or safe harbor rules There is no value attached to naming opportunities, names on honor rolls or gift club membership; safe harbor rules apply
Definitions of a Donor
The IRS defines a donor as someone who makes a contribution directly to a qualified organization or legal representative of that organization, or to a qualified trust for that organization, or in a similar specifically authorized legal arrangement. CASE Management Reporting Standards defines donors as those individuals or organizations that transmit a gift or grant to a qualified institution. In cases where a contribution passes through several entities, the last of the entities through which it passes before being received by the donee should be cited as the donor.
Securities
Publicly Traded Securities (common stock)
Securities for which market quotations are readily available on an established securities market as of the date of the contribution
Securities
Closely Held Securities
Market quotations are not readily available Valuation is more difficult many times an appraisal is needed; may want to coordinate time of gift with annual business appraisal Transaction is typically more complicated/lengthy to administer Marketability is a consideration in determining whether to accept
Examples include:
Equipment Software Software Licenses Printed Materials Food Artwork Books Furniture Motor Vehicles
Motor Vehicles
Distinction now is based on intended use by Donee Does the University intend to significantly use or materially improve the vehicle OR Does the University intend to sell the vehicle and use the proceeds
Services
The value of a persons or organizations time or service is not considered a charitable contribution and is not countable, regardless of whether the individual assists as a volunteer or as a professional providing a specialized service.
Services
If services are not recognized by the IRS as a contribution, why are you asked to provide us documentation? Because of non-IRS regulations that require feeding certain service donations into the general ledger (PeopleSoft).
Intellectual Property
Considered intangible personal property, but a special case: Concern about the difficulty of determining the value of the contribution Often the donors deduction was much greater than the benefit we realized A donors deduction is limited to the basis of the property or the fair market value of the property, whichever is less. There are caps on intellectual property; lesser of actual cost to produce or $1million
Real Property
Real Property
Real property is land and generally anything that is built on, growing on or attached to the land (IRS Pub. 526) Real property includes both improved and unimproved real estate
Auctions
A donor contributing an item to be used in a charity auction is eligible for a tax deduction related to the item donated. Provide donor with a Gift-in-Kind receipt Items purchased at auction: Only the amount, if any, in excess of the fair market value of an item purchased can be considered a charitable contribution.
Unrelated use unrelated to the purpose or function constituting the basis of the Universitys exemption.
Example A case of wine given to the University to sell at a fundraising auction
Form 8283
Section A: For deductions of $5,000 or less Also for deductions of publicly traded securities, regardless of amount Section A is completed entirely by the donor The University does NOT need to be involved with Form 8283 for gifts listed in Section A Gift Processing sends 8283s as a courtesy for all Gifts-in-Kind, except for Athletics
Form 8283
Must Be Completed
For deductions of more than $5,000, except for deduction of publicly traded securities Section B has four parts.
Only Part IV, Donee Acknowledgement, is completed by the University.
Form 8283
What we DO NOT certify: The Appraisal (Value/Legitimacy)
Form 8282
Identifies the charitable organization, the original donor and donee (any intermediate donees) Provides information about the property Description, date received, date sold or disposed of, amount received upon disposition The University must file if the property is sold before the required 3 years.
Credit Cards
IRS Rules are firm about gift date Important to educate donor
Important for you to understand the impact of gift date for your donors
Written Acknowledgments
What must they include: The name of the organization The amount of a cash contribution or for noncash gifts, a description of the property (NOT a value) A statement that no goods or services were provided by the organization, or a description and good faith estimate of the value of the goods and services (quid pro quo)
Written Acknowledgments
Special rules apply for donated vehicles sold at $500 or less Generally, if the charity sells the vehicle, the donor deduction is limited to the gross proceeds received by the organization from the sale.
Example
If a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution In this example the charitable contribution part of the payment is $60 Even though the deduction is less than $75, a disclosure statement must be sent because the donors payment (quid pro quo contribution) is more than $75 If a receipt is sent for payment under $75, it must show quid pro quo information. Also, remember, solicitation material must always mention quid pro quo.
Unreimbursed Expenses
Out-of-pocket expenses incurred while providing volunteer services are deductible under certain circumstances (ex. Transportation) Donor cannot deduct a single contribution of $250 or more without a written acknowledgment
Gift Acceptance
References
Determining the Value of Donated Property IRS Pub. 561 http://www.irs.gov/pub/irs-pdf/p561.pdf Charitable Contributions IRS Pub. 526 http://www.irs.gov/pub/irs-pdf/p526.pdf Charitable Contribution IRS Pub. 1771 http://www.irs.gov/pub/irs-pdf/p1771.pdf Updates on Disclosure and Substantiation Rules
http://www.irs.ustreas.gov/pub/irs-tege/topic-g.pdf
What if
Mr. Smith donates the use of an apartment to the University to house a visiting professor for the term (10 months). The rental cost of the apartment is $1,000 per month. Gift or No Gift? No Gift; soft credit How do you acknowledge? Thank-you letter
What if
Mrs. Tisdale wants to write a check for $10,000 to support a student from out-of-state who has need. She wants to pick the student. Gift or No Gift? No Gift; soft credit
What if
Mr. Jones donates two tickets for a musical concert to a gala auction valued at $100. The winning bidder pays $150. Gift or No Gift? Gift; hard credit How do you acknowledge? $100 donation for Jones; $50 donation to bidder
What if
Mr. Jones donates the use of his condo in Florida for one week to the gala auction valued at $2,000. The winning bid pays $1,500. Gift or No Gift? No Gift; soft credit How do you acknowledge? Thank-you letter to donor only
What if
Golf Cars USA donates the use of Golf Cars for athletic events. The donor valued the service at $2,500. Gift or No Gift? No Gift; soft credit How do you acknowledge? Thank-you letter
What if
Xerox allowed the school use of printers and copiers valued at $26,500? Gift or No Gift? No Gift; soft credit How do you acknowledge? Thank-you letter
What if
The Holiday Inn donated hotel rooms for Athletic Department usage valued at $2,000.00. Gift or No Gift? Gift (to be determined due to special IRS regulations)
What if
A company donated signs, banners and posters for University usage valued at $5,000. Gift or No Gift? Gift; hard credit How do you acknowledge? Tax receipt
What if
A company provided one billboard for a year for University usage valued at $12,000. Gift or no gift? Gift; hard and soft credit
What if
The University purchases a large piece of equipment for $68,500. The fair market value of the equipment is $73,500. The University negotiated the one-time discount. Gift or no gift? Gift ($5,000); hard credit
What if
That same company also donates a special part that does not come standard with the equipment valued at $5,000, several additional parts to make the equipment operational valued at $10,000 and they send someone from California to install the equipment valued at $5,000. Gift or no gift? Gift - $15,000 hard credit. $5,000 for installation is not a gift (services)
Questions?