In addition to considering the Advantages and Disadvantages of Bequests and Outright Gifts, it is essential to examine some of the legal and tax requirements exacted by the IRS and State taxing authorities:
Organization Must Qualify to Receive Charitable Contributions – IRS Publication 526 provides instruction as to what kinds of organizations are allowed to receive charitable contributions. While this may seem self evident, it is the Donor who will subsequently bear the burden if a donee organization turns out not to qualify.
Proper Documentation Must be Filed with the Internal Revenue Service – Donors may only deduct a charitable contribution that exceeds $250.00 if he or she is given an Acknowledgment from the qualified organization or certain payroll deduction records. If more than one gift exceeding $250.00 is made, a Donor must be given either separate acknowledgments for each gift that exceeds $250.00 or one acknowledgment that shows their total contributions.
Fair Market Value of the Donated Property must be Assessed – For cash or publicly traded securities, this requirement is rather simple to carry out. Less clear, however, can be the fair market value of assets that are more difficult to evaluate (i.e. works of art, real estate, etc).
More cutting edge giving techniques also involve tax and legal requirements.
Because of the the important nature of these requirements, we regularly encourage seeking qualified legal counsel to assist you when making donations over $250.00.
For further guidance and requirements, check with these IRS Publications:
IRS Publication 561: Determining the Value of Donated Property
IRS Publication 526: Charitable Contributions