Nonprofit Law/Gift Cards

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Question
QUESTION: After I resigned as a pastor, the church gave to me $1,000 in Amazon gifts cards as a going away present, and one individual gave to me $300.  Is this taxable income?

ANSWER: The Internal Revenue Code at section 102(a) provides that gifts are
not income.  "Gross income does not include the value of property
acquired by gift..."
http://codes.lp.findlaw.com/uscode/26/A/1/B/III/102

However, section 102(c) of the Code has "Subsection (a) shall not
exclude from gross income any amount transferred by or for an
employer to, or for the benefit of, an employee...."

It appears you were an employee of the church so the gifts card value from the church is taxable income to you.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    



---------- FOLLOW-UP ----------

QUESTION: Thank you for your prompt response.  Three follow-up questions: first, since I had resigned and was no longer an employee, would section 102(c) even apply?; second, if this gift was from the people as individuals and not the church as employer, would it be taxable income?; and third, because IRS Rev. Rul. 55-422, 1955-1 C.B. 14 called gifts to a minister after retirement non-taxable income because the minister was "adequately compensated for his past services" and "did not undertake to perform any further services for the congregation and was not expected to do so," wouldn't the same reasoning apply to freewill post-resignation gifts to a former pastor?

Answer
It depends if the church decided before or after your retirement whether they would be giving you the $1000 in gift cards.  If not, then you are correct -- that would not be income to you as the facts of your situation are similar to those in the Revenue Ruling you cited to:
--- Start of Excerpt ---
In the cited cases the payments were not made in accordance with any
enforceable agreement, established plan, or past practice; the recipient
did not undertake to perform any further services for the congregation and
was not expected to do so; there was a far closer personal relationship
between the recipient and the congregation than is found in lay employment
relationships; and the available evidence indicated that the amount paid
was determined in the light of the financial position of the congregation
and  the needs of the recipient, who had been adequately compensated for
his past services.
--- End of Excerpt ---
http://www.charitableplanning.com/document/670756

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. Ths response is intended to be a general statement of law, should not be relied upon as
legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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