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Tax Tips, Finance Tips, Fun Events

Tips for Individuals, Businesses and Charities. Fun Events.

Charitable Contributions Have To Be Real

The Tax Court disallowed a charitable contribution deduction for $145,000 purportedly representing 20,000 items donated to Goodwill in a single year. This included a deduction for $71,434 in used clothing. They ended up getting a charitable contribution deduction for $250 as they did not follow strict substantiation requirements (such as having an appraisal or signed documentation by the charity) and their testimony was not creditable. (Ohde v. Commissioner, TC Memo 2017-137),

The case did not say how much income they had but the taxpayers were in West Virginia where average incomes are considerably lower than $145,000 a year. Besides the $145,000 deduction for one year, for the 5 surrounding tax years they also claimed another $500,000 in donations for items donated to charity.

Tax Tip: Don't be a pig when claiming deductions and make sure all required substantiation is received.

Richard Pon CPA, CFP