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Question
Mr. Stancil,
My friends would like to have a spaghetti dinner to help pay for some of my six year olds medical care.  We have insurance but have been paying large medical bills for four years now and to be honest it is becoming difficult.  We do not qualify for any write offs.  He is getting ready to have spinal surgery and they would like to raise money to cover out of pocket expenses.  Their goal is ten thousand dollars (that is what we will owe out of pocket).  We have never done anything like this and are unsure on taxes, and it feels a little uncomfortable.  From what I have read online we need to set up a non interest bearing account specified for medical.  Are they allowed to sell tickets to a spaghetti feed?  Auction or raffle off donated items?  Also, they would like to sell "support our cause shirts"?  Some of this looks like a no to me.  Sounds like all should be strictly a donation or gift.  I would greatly appreciate any advise you can give.

Thank you very much!

Dianna

Answer
Dianna,

Thanks for your question.

If you sell things such as a dinner, you are, in essence, operating a business.  Likewise, with a raffle or auction.  You are not an IRS qualified tax exempt organization, so you can't accept charitable contributions.  Your proceeds would be taxable income.

If you had a spaghetti dinner and it was strictly a donation rather than a charge, that would be OK.  Just set up a box for people to drop any donation in,  or some similar arrangement.

Likewise, any money or property donated to you would not create a tax deduction for the donor.

If people give you money, that is treated as a gift and would be not taxable to you. However it is not a deduction for them.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John 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 am Professor Emeritus at Florida Southern 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 CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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