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Nonprofit Law/Gross Receipt Calculation

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Question
A supporter makes a contribution towards a replacement tire for a tractor owned and used by a nonprofit 501(c) (3) organization.
Questions relate to 990 preparation:

  Is that contribution considered an in-kind donation?
  Does it count towards gross receipts total?

Would be grateful for your clarity on the issue.

Answer
By using the phrase "contribution towards" it appears that the donation is made in cash (or check). Even though the donor may have earmarked the use of the funds, the donation is considered a cash donation and not "in-kind". It does count towards the gross receipts total.

Even if the donation was not in cash, but, for example, the donation was of a new tire or a used car, then, still, the donation is considered part of gross receipts. The IRS defines the term "gross receipts" for exempt organizations
at http://www.irs.gov/Charities-&-Non-Profits/Gross-Receipts-Defined as, "the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs
or expenses."In the instructions for Form 990-EZ have for Part 1, line 1 instruct, "Report the value of noncash contributions at the time of the donation. For example, report the gross value of a donated car
as of the time the car was received as a donation." http://www.irs.gov/pub/irs-pdf/i990ez.pdf

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

Expertise

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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