Discussion:Questionable Contributions
From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.
From TaxAlmanac
Discussion Forum Index --> Basic Tax Questions --> Questionable Contributions
Discussion Forum Index --> Tax Questions --> Questionable Contributions
| 2 November 2007 | |
| Has anyone here ever come across a taxpayer that attends a smaller closely organized church and every year the taxpayer receives and very large contribution receipt? It amazes me how the taxpayer struggles to pay other bills (including prep fees) and yet manages to contribute over $30,000 to his church ever year. He pays the contributions from his S corp and his banking is reconciled. I do not audit his S corp.
As a preparer what responsibility do I have to question a church's records? Does the IRS investigate church bookkeeping records? Something does not pass the smell test here. I have no other problems with this client's return everything is well documented.
| |
| 2 November 2007 | |
| Hi do you do the S corp return and see the money going out to the charity? The S corp should be reporting the contribution on the K-1. bye | |
| 2 November 2007 | |
| I receive a Balance sheet and P/L statement. Correct, contributions flow-through from K-1. S corp is 100% owned.
Does the IRS look at church collections? Is a taxpayer's cleared check adequate support to document charitable giving? Or would the IRS want to see the church statement? TW | |
Death&Taxes (talk|edits) said: | 2 November 2007 |
| One check? On any contribution of more than $250, there must be an acknowledgment giving date and amount, and a statement that there was no personal benefit for the donation.
Give us some idea what the $30,000 is in relation to, i.e., how much income does he show? | |
| November 2, 2007 | |
| I say it doesn't matter. If it flows out of the S, it explains why he doesn't have much income (cash, since the charitable line doesn't offset income), and go on from there. Not your job. Again puzzled at another flow thru entity where one accountant does the biz and another does the personal. This just should not be. | |
| 2 November 2007 | |
| Taxworld2 didn't say he didn't do the S-corp return. I wonder if the client is involved with the church somehow... | |
| 2 November 2007 | |
| Does the church's annual statement say anything at all about the $ 30,000 involving "no other goods or services" in exchange? | |
Death&Taxes (talk|edits) said: | 2 November 2007 |
| Uncle Sam rightly expands on my comment. "no other goods and services in exchange" is the area I wonder about. S Corp gives donation and perhaps magically two children/grandchildren of shareholderattend a church college for no tuition. | |
| 2 November 2007 | |
| IRS procedurally restricts itself in the examination of churches, requiring a fairly high level of approval to do so. That requires some evidence it may not be a church. They could look at the back of a contributor's check; interview the contributor; locate the 1040s of people who receive income from it or run the place. If the acknowledgment is lacking, they can secure a better one, directly or through the t/p. W/o the approval cited above, they can interview the pastor as to matters concerning relationship to the contributor, or other financial transactions with the contributor. Like refunding the money later!! | |
To join in on this discussion, you must first
log in.
