Have a Tax Question? Ask a Tax Expert
Welcome and thank you for your question. I'll do my best to provide an informative answer. Please let me know if you need any clarification.
Assuming the charity has applied for and received 501(c)(3) status, then yes the organization can accept tax deductible donations to perform the necessary restoration of the building. This is especially true given that the purpose of the organization is to preserve and protect this historically significant building. Any of the above noted restoration items directly relate to the purpose and mission of the organization. If not for donations received for the above building work, the organization would not be able to carry out it's mission.
Note that nonprofits must report and pay tax on unrelated business income. In the above case, I don't feel this applies given that the money raised is directly supporting the cause of the organization.
If you need further information please let me know.
Hello, you have partially answered my question. Unanswered is: Can adonor giving a rugs or light fixtures to replace worn out lighting andcarpeting in the building receive a tax deduction letter from thefoundation? Can you give me the IRS code number that addresses thissituation? Thanks, XXXXX XXXXX
Sorry - I couldn't tell from your question you were referring to donated property (as opposed to cash).
Deductibility of donations can be found in Code section 170.
Yes, individuals are permitted to donate personal property and receive a deduction equal to the lesser of the fair market value of the property or the cost basis of the property as long as they donate the entire interest in the property (not a partial interest); Section 170(a)(3).
Deductions for capital gain property are limited to 30% of AGI instead of the normal 50%; 170(b)(1)(C).
Also, please refer to IRS Publication 526 regarding Charitable Contributions:
In the Publication, see the section regarding tangible personal property put to unrelated use. This type of contribution would not be deductible. In the situation you described above, it does not sound to me like unrelated use because the donated items are specifically for the purpose of the exempt organization.
Hope this helps the other part of your question. If you need anything else please let me know.
Hello, Thanks for your response. For some reason the software will notallow me to respond to you when I click on the "REPLY" as directed.Therefore I am replying to your email directly. I am still uncertainif the IRS Code 526 relates to the 501(c)(3) or to the donor. Can youdirect me to the IRS code for the operation of the 501(c)(3)acceptance of the donations outlined? This should end my questionsituation. Thanks for your followup.
Subchapter F of the Code covers exempt organizations. This includes sections 501 through 530. Section 501(c)(3) is a small part of Subchapter F that simply defines a type of exempt organization. You may find all of section 501 helpful. Section 503 discusses requirements for exemption. Here is a link to all of Subchapter F:
Reading Code is not fun at all, so I would also like to provide you a link to IRS Publication 557, "Tax Exempt Status for Your Organization":
Page 16 discusses donated property and I find this entire publication rather useful.
I do believe that Code Section 170, where it defines charitable contributions, allows for the contributions of property. Even though it speaks to the donors side, the exempt organization would still be in receipt of a properly donated property contribution if it meets the definition in Section 170. Please see the link here:
And this section speaks to the sale of donated property (although the above publication 557 is more informative):
I know all of this is pretty confusing, but I've dealt with similar situations in practice. I've never seen a charity have problems for accepting donated property. Just be sure the proper appraisals are done if required and the 8282's are filed if property is sold.