AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Society of Tax Professionals, and the Institute of Management Accountants.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper.
Expert: John Stancil, CPA Date: 7/13/2008 Subject: Benevolence Gifts
Question QUESTION: Dear John. Thanks for all your past entries. I've just spent the past couple hours reading through them. I have a situation I'd like info on:
1. Church employee A has a $1,700 car repair bill. Other employees of the church and congregants give money to help him with his car repair. Am I correct in understanding that they CANNOT take that as tax deductible and the recipient must? Any difference if it's NOT an employee of the church?
2. Is there ever a point that an employee can be given assistance through church benevolence?
3. If someone gives a gift of $700 and verbally or in a separate instance requests the church to consider giving money of or near $700 to help someone in need, is that gray area or not? Can we take their verbal suggestion? Or is that still "designated" giving?
4. What IRS doc can I read that outlines this?
Thanks..
ANSWER: Bryan,
Thanks for your question.
1. That is correct. The donor gets no charitable contribution deduction, the employee has income of $1,700 which should be reflected on his W-2. He would not have income if the individuals gave him the money directly. If he were not an employee, it would not be income to him. There would be a charitable contribution deduction unless the donors gave with the stipulation that the money be given to that specific individual.
2. No, anything given an employee is considered a part of the employee-employer relationship.
3. Money can ge given to a benevolence fund, but the donor cannot control the specific use of that money.
4. As this is a free forum, I cannot take the time to research specific IRS code sections and documentation. Frequently there are numerous sections of the law that are applicable, so I do not cite code in this forum. However, I would refer you to the Church and Clergy Tax Guide by Richard Hammar. An excellent resource.
Hope this helps.
John Stancil, CPA
---------- FOLLOW-UP ----------
QUESTION: Thank you John. How do we handle the gray area? What should we do when someone gives $700.00 and says, "Person A needs help with thier car and I'd really really be grateful if you helped them out." I'm not spineless, I don't mind saying "no", but when there is a legitimate need and it happens this way, can it be done legally? If the donation comes separately from the request and the person's name isn't on the check? Can we keep a portion of the gift and only give 90% or something like that? If this can't be done, what would you suggest to handle situations like this. It happens regularly for me.
Thanks for the final question. I'm grateful to you.
Bryan
Answer In that case, you must tell the donor you would be glad to do that, but he cannot receive a charitable contribution for the donation, as he has specified the recipient and use of the money. The person can either give to the church benevolence fund in general or give directly to the individual (and get no deduction).
The key is that the donor cannot control the ultimate disposition of the gift - hie is giving to the church. By specifying the recipient he is in essence making a contribution to an individual and attempting to get a deduction for it.
