response 1 of 72:

Jul 10 05:12 UTC 1998

Request IRS Catalog No. 20054Q (or its most current incarnation). It
may be on the web. The title is "Charitable Contributions - Substantiation
and Disclosure Requirements". 

Written acknowledgements are only *required* for donations in excess of
$250. For that reason, I would opine that e-mail acknowledgements for
smaller donations would be fine, especially coupled with an offer to
provide a written acknowledgement. The acknowledgement should, in any
case, be sent as quickly as possible, if only to indicate appreciation
for the donation (and keep them coming.....). 

response 3 of 72:

Jul 10 13:09 UTC 1998

Re #1: I do send the e-mail acknowledgement as quickly as possible, for the
reason you state.  But it would save time and money if I could send out paper
receipts only at the end of the year.  (And people who make more than one
donation in the course of the year would only need to save one receipt.)

response 5 of 72:

Jul 10 15:33 UTC 1998

I would think that in most cases an "end of the tax year" reciept would be more
than adequate.  (Maybe even better, since you don't have as much time to lose
it before you file your taxes.)

I also think that a mention that paper reciepts are available for tax purposes
attached to the e-mail acknowledgement and perhaps another toward the end of
the last quarter should be enough.

My opinion, of course, and I know nothing about these things.

response 7 of 72:

Jul 13 04:40 UTC 1998

A question I've been wondering about, and have been meaning to research.
How do we handle auctions donations?

Suppose Dee donates an object and Bee buys it for 10 dollars. 
Presumably, we need to figure out the value of the object, say V
dollars, and Dee gets credit for a donation to Grex of V dollars, while
Bee gets credit for a donation to Grex of 10-V dollars.  That seems
obvious enough.

But how do we come up with the value V?

And what if V is greater than 10?  Should we always set the minimum bid
at V dollars to ensure this doesn't happen?  If we publicize the "value"
of an object, would that discourage people from bidding above that
value?

response 9 of 72:

Jul 13 19:08 UTC 1998

I searched around on the IRS site and found reference to the publication Rane
mentioned.  It's number has chenged and it's not on the web site, but I called
up and ordered it, so in theory I should get it in the next 2 weeks.

I also found (on the IRS site) what looks like a plain-English version of the
rules on receipts, and I downloaded that but haven't yet digested it.  At
a glance, it appears that waiting till the end of the year may be OK for a
"substantiation" receipt, which is the thing you use to claim a deduction on
your taxes.  However there is also the concept of a "disclosure notice", which
is something you send donors to tell them how much the thing they got in
return for their donation is worth, ala Rane's magazine example above.  The
disclosure notice must be sent out in a "timely" manner, which I think means
we couldn't wait until the end of the year.

I don't think we need to send out any disclosure notices, however, since we
don't normally send out stuff in response to donations (other than a copy of
the Grex handbook, which is small enough not to count).  This is the part I
want to make sure of, though, so I need to read the regs carefully.

I'm thinking that the Accounting Aid Society, which we used to belong to,
might be worth turning to for help.  Perhaps they could give us some
definitive answers.  We might have to rejoin them, which would cost $25 per 
year.  danr, do you have any thoughts on that suggestion?

response 11 of 72:

Jul 14 05:41 UTC 1998

We would need to *acknowledged* donations of goods, so that the donor has
a record that that Item had been donated. A 'form' acknowledgement with
a space for the identification of the item(s) would be fine, and it also
permits repeating the IRS rules briefly on valuing the donation (that Grex
can't and the donor is responsible for doing so).

response 13 of 72:

Jul 14 20:30 UTC 1998

Yes, no. The form states "Valuation of the donated property is the
responsibility of the donor."

response 15 of 72:

Jul 21 05:07 UTC 1998

back in resp:8 , Rane said that only the donor can claim the
(donor-determined) value of a donation to the Auction. That is true, but might
be misleading. If a bidder bids more than the fair market value of the item,
the excess can be considered a donation by the bidder. I believe we can provide
a fair market value in that case, but I don't think we are obligated to provide
a disclosure notice for auction items.

response 17 of 72:

Jul 22 12:26 UTC 1998

I'm trying to figure out if membership donations are fully deductable. 
People do receive something for their memberships - ability to initiate
telnet, ftp and irc sessions from their Grex accounts.  It is hard to
estimate the fair market value of that increment in service that members
get beyond what other users get.  Nobody sells it separately.  The
definition of "fair market value" is "what a willing buyer would pay a
willing seller."  I can't even begin to guess.

There is good chance that this can be treated as a membership package
benefit.  In the IRS publication "Updates on Disclosure and
Substantiation Rules" it talks about "safe harbors" for kinds of
benefits that can be treated as being of zero value:

    The fourth safe harbor involves membership package benefits.
  Charities, such as museums, libraries, zoos, and arboretums,
  typically use membership packages to build a following and base of
  support. The benefits of a typical membership package may include
  free parking, gift shop discounts, an admission discount, etc.
  Charitable organizations which offer basic membership packages at $75
  or less and include some or all of the following benefits can treat
  such membership benefits as having insubstantial value and, hence,
  need not value them. See Proposed Regs. 1.170A-13(f)(8)(i)(B) and
  1.6115-1(b). The membership benefits are:

   a) Any right or privilege, other than rights to seating at collegiate
      athletic events, the contributor can exercise frequently during
      the membership period. Examples of such rights and privileges
      include free or discounted admission to organizations' facilities
      or events, free or discounted parking, preferred access to goods
      or services, and discounts on purchases of goods or services; and

   b) Admission to events during the membership period open only to
      members if the cost per person for the event, excluding any
      allocable overhead, is within the limits for low cost articles.
      For 1996, the limit for low cost articles is $6.70. See Rev. Proc.
      95-53, 1995-52 I.R.B. 22.

Case (a) looks like it should cover memberships.  This would mean that
membership fees are deductable from the donor's taxes.

response 19 of 72:

Jul 22 15:59 UTC 1998

Here's another description of the rules for deducting membership dues in
IRS Publication 526, "Charitable Contributions".  I think it's a bit
clearer:

        MEMBERSHIP FEES OR DUES.  You may be able
        to  deduct membership fees  or  dues you pay
        to a qualified organization. However, you can
        deduct only the amount that is more than the
        value of the benefits you receive.   [...]

        Certain  membership  benefits  can  be
        disregarded. Both you and the organization
        can  disregard  certain  membership  benefits
        you  get  in  return  for  an  annual  payment  of
        $75 or less to the qualified organization. You
        can pay more than $75 to the organization if
        the  organization  does  not  require  a  larger
        payment  for  you  to  get  the  benefits.  The
        benefits covered under this rule are:

        1) Any rights or privileges, other than those
           discussed under  Athletic events, earlier,
           that you can use frequently while you are
           a member, such as:

           a) Free or discounted admission to the
              organization's facilities or events,

           b) Free or discounted parking,

           c) Preferred access to goods or services,
              and

           d) Discounts on the purchase of goods
              and services, and 

        2) Admission, while you are a member, to
           events that are open only to members
           of the organization if the organization
           reasonably projects that the cost per
           person (excluding any allocated overhead)
           is not more than a specified amount, 
           which may be adjusted annually for inflation.
           (This is the amount for low-cost articles 
           given in the annual revenue procedure with
           inflation adjusted amounts for the current
           year. You can get this figure from the IRS.)

This clarifies that the $75 limit is on annual memberships.  Even people
who pay $6 a month pay only $72 a year, so we are under that limit. 
Though none of the (a), (b), (c) or (d) examples really fits our
membership benefits, they certainly are not athletic events and they
certainly can be exercised frequently while a member.

So, personally, I'm pretty convinced that Grex membership donations are
fully tax deductable, and would happily deduct them from my taxes, but
I'm not sure I'm ready to announce to the members, as a spokesman for
Grex, that all members can deduct their membership dues.  Would it be
possible to write to the IRS asking about this, and get a somewhat more
reliable opinion?  I'm not sure where you would address such a letter.

response 21 of 72:

Jul 23 02:02 UTC 1998

Sigh....that's what I've been trying to tell everyone for months...but I
am glad that Jan has so exhaustively quoted from the sources. 

Do NOT write to the IRS to ask about this. Just quote the relevant rules.
It is *always* up to the donor to fit them to their circumstances.

You do NOT have to come up with a "fair market value" for any donation,
of any item of any size. MKC was recently donated 2.5 acres of land,
worth thousands. It is up to the donor to value it for tax purposes. In
regard to a donation that is subsequently auctioned to raise money...the
donor is in exactly the same position of having to themsevles determine
the value. The buyer gets NO deductibility from their purchase, no matter
how much they pay. What the buyer pays is NEVER a donation. 

response 23 of 72:

Jul 23 14:57 UTC 1998

A member also gets the right to vote and make motions.  I suppose it's
technically possible to say that all of the $72/year of a membership
could be squeezed into one of the exceptions.  However, we're then
saying that Grex membership is worthless!  On M-Net, we don't claim
that memberships or patronships are tax-deductible because we think
those folks get things of value.  Donations to our auctions are
tax-deductible, but of course our receipts for those don't list the
value.  However, *purchases* of things from the auction are *not*
tax-deductible because the purchaser gets the value of the goods
s/he has bought.