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Nonprofit Law/Are my donations tax deductible while a 501c3 application is pending!

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Question
Dear Harvey,

I have a couple of questions. I donated to a Georgia Domestic Nonprofit Corporation. As per the CEO, their 501c3 application is pending.


The CEO of the Georgia Domestic Nonprofit posted this statement:

'Folks here is the link to the IRS page that describes that your donations are tax deductible while we are in application process retroactive to when we were created. That would be 15th March 2015'.

This is the link he posted:

https://www.irs.gov/Charities-%26-Non-Profits/Charitable-Organizations/Contributions-to-Organization-with-IRS-Application-Pending

I am not sure if his statement is accurate and if my donation can be claimed as a deduction in my tax return while the application is pending. Also the date he has stated 15th March 2015, that date is the informal date of creation. However the nonprofit was only incorporated legally on 12/7/2015 based on the documents obtained from Georgia state. So in this case if the IRS grants them the 501c3 status, which is the date that is applicable here? I made the donation prior to the date of incorporation which was 12/7/2015.

Would appreciate any input from you.

Thank you
Heinz

Answer
The information on that IRS page that you linked to is:
--- Start of excerpt ---
When the IRS approves a timely filed exemption application, exempt status is recognized back to the date the organization was created. Thus, while an application is pending, the organization can treat itself as exempt from federal income tax under section 501(c)(3).  For example, it must file Form 990 (instead of an income tax return) while its application is pending.  However, contributors to the organization do not have advance assurance of deductibility because the organizationís exemption is pending.  If the organization ultimately qualifies for exemption for the period in which the contribution is made, the contribution will be tax-deductible by the donor.  Alternatively, if the organization ultimately does not qualify for exemption, then the contribution will not be tax deductible.
-- End of excerpt ---

The date the organization was created is, for that organization, the date of incorporation by the State of Georgia.  You would not have evidence, therefore, of a donation to that organization if you gave that person money before that time.  Was it in the form of a check?  If so, what was the name that the check was made out to? After you give me that information I will reply further. Generally, though, I recommend that pre-incorporation donations be in the form of a loan which would be paid back after incorporation and then, after you are paid back you would then be able to donate to the corporation.

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. For me to consider your individual situation and how the law applies, I would need to gather more information.

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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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