When a taxpayer makes a charitable donation, he or she must maintain adequate records. Without such records, the taxpayer is not entitled to a charitable deduction under Section 170 of the Internal Revenue Code. This situation occurred in Joyce A. Linzy v. Commissioner because the taxpayer, who ironically owned and operated an income tax return preparation business, was unable to provide proper records.
The taxpayer made charitable contributions to Church 1 and Church 2 in 2007. The contributions to Church 1 totaled $7,500 and were acknowledged by both a letter dated January 1, 2010 and copies of checks, all for amounts greater than $250. The contributions to Church 2 were evidenced by a tithing statement dated January 1, 2010 which acknowledged that the taxpayer donated a total of $2,255 and included several copies of checks, some of which were for amounts less than $250.
For cash donations less than $250, a canceled check, a receipt or other reliable evidence is considered an adequate record. To be reliable, the other evidence must show the name of the donee, the date of the contribution and the amount of the contribution. However, for contributions of cash of $250 or more, the donor must obtain a contemporaneous written acknowledgement of the donation from the donee. This acknowledgement must, at a minimum, contain a description of the contribution, a statement about whether any goods or services were provided in consideration and a good faith estimate of the value of any such goods or services. Critical for the taxpayer in the above case, the acknowledgement must be obtained on or before the earlier of: (1) the date on which taxpayer files a return for the taxable year in which the contribution was made; or (2) the due date for filing such return.
Thus, unfortunately for the taxpayer, the contributions made to Church 1 were not deductible because the letter did not state whether goods or services were received as consideration and it was not received by the proper date. As for the contributions to Church 2, the tithing statement is sufficient evidence for those donations under $250 but does not work for those over $250 because it was also received two years after the appropriate date.