Our client. Mal Manley. provided information in his single income revenue enhancement return client questionnaire to the consequence that he made over 100 comparatively little hard currency parts numbering $ 25. 000 to chartable organisations. The IRS audited Mal’s revenue enhancement return two old ages ago and denied 75 % of that year’s charitable part tax write-off because the tax write-off was non substantiated. Issues
The deductibility of Mal Manley’s charitable tax write-offs depend on two issues: foremost. whether his hard currency parts of less than $ 250 can be substantiated with a bank record. grosss. or payroll tax write-off records ; and back. whether hard currency parts of $ 250 or more. can be substantiated with a separate recognition signifier the qualified organisation. Applicable Law
Section 170 provides that hard currency parts include those paid by hard currency. cheque. electronic financess transfer. debit card. recognition card. or payroll tax write-off. Cash parts can non be deducted. regardless of the sum. unless one of the followers is kept: a bank record that shows the name of the qualified organisation. the day of the month of the part and the sum of the part ; a reception from a qualified organisation demoing the name of the organisation. the day of the month of the part. and the sum of the part ; or payroll tax write-off records. Section 170 provides that parts of $ 250 or more can be deducted merely if you have an recognition of your part from the qualified organisation or certain paysheet tax write-off records. If you made more than one part of $ 250 or more. you must hold either a separate recognition for each or one recognition that lists each part and the day of the month of each part and shows your entire parts. Analysis
Issue 1: Based on the renunciation governments. Mal Manley’s hard currency parts of less than $ 250 can non be deducted unless he can supply the necessary certification pursuant to Section 170 of the IRC of 1986 as Amended. Issue
2: Based on the foregoing governments. Mal Manley’s hard currency parts of more than $ 250 can non be taken at face value and alternatively must be documented with the appropriate recognition to measure up for tax write-off. Decision
Our house is bound by SSTS No. 3 associating to certain procedural facets of fixing returns necessitating us to ask and fulfill ourselves in respects to Mal Manley’s incorrect. uncomplete. inconsistent. or unreasonable taxpayer supplied information sing his charitable parts. Absent of satisfaction to this consequence. based on the anterior year’s IRS audit. our house should decline inclusion of questionable tax write-offs. If Mal Manley insists the tax write-offs be included our house should withdraw from the revenue enhancement readying.
Professional Accounting Associates
1222 First City Plaza
La Crosse. WI 54601
January 31. 2013
22650 West Haven Drive
La Crosse. WI 54601
Dear Mr. Manly:
It was great to see you at Thursday’s Chamber of Commerce meeting. It was promoting to see the increased attending. even if it meant waiting in traffic for a half-hour to go out the parking incline! In our meeting on December 6. you submitted our client questionnaire in respects to your 2012 single revenue enhancement return. I am composing today to inform you of the demand for extra information sing your hard currency charitable parts. In making this decision. we consulted relevant commissariats of the Internal Revenue Code ( “IRC” ) . applicable Treasury Regulations under IRC. and a pertinent tribunal instances. In add-on. we reviewed our duties as laid out in the Statements on Standards for Tax Services ( SSTSs ) . issued by the American Institute of Certified Public Accountants ( AICPA ) . The facts as we understand them are as follows: you made 100 comparatively little hard currency parts numbering $ 25. 000 to charitable organisations. The IRS audited your revenue enhancement return two old ages ago and denied 75 % of that year’s charitable part tax write-off because the tax write-off was non substantiated. Under the IRC hard currency parts can non be deducted. regardless of the sum. unless one of the followers is kept: a bank record. a reception. or payroll tax write-off records.
Contributions of $ 250 or more can be deducted merely if you have an recognition of your part from the qualified organisation or certain paysheet tax write-off records. Clearly. we presently lack the needed certification to do a claim for these tax write-offs on your behalf. Because of this deficiency of certification. we suggest that you look into your records. reach your bank. and reach the receiver organisations in an effort to bring forth the needed paperss. so we can chase away any uncertainty that may originate in the class of an IRS audit. Please name me at 777-8888 if you have any inquiries refering this decision. May I suggest that we meet following hebdomad to discourse the possibility of revising your Schedule A. U. S. Treasury Regulations require us to rede you that. unless otherwise noted. any federal revenue enhancement advice in this communicating ( including any fond regards. enclosures. or other attach toing stuffs ) was non intended or written to be used. and it can non be used. by any taxpayer for the intent of avoiding punishments ; moreover. this communicating was non intended or written to back up the publicity or selling of any of the minutess or maters it addresses.