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Business entities that conduct philanthropic endeavors by donating to charity cannot always expect that their donations are tax-deductible. There are certain conditions that have to be met for such donation to be duly recognized by the Internal Revenue Service as such. Businesses thinking of donating should keep in mind certain important details.

There is a general perception that donations to tax-exempt organizations such as charities are automatically tax deductible. Although this is generally true, there are certain exception such as charities located in another country. Charities with income of less than $5000 are not required to apply for tax exemption.

According to the Internal Revenue Code, the actual amount that is allowed to deductible would depend on what kind of charity the business is donating to. Charities can either be public charity, private foundation, or private operating foundation. Other entities to which tax-deductible gifts can be made include cooperative service organizations and Federal reserve banks, among others.

In common perception, charitable institutions consist of religious organizations such as churches, synagogues, ans temples, as well as non-profit schools, hospitals, and the like. The main consideration in determining if the money given falls under the category of donations is the absence of any material benefit to the donor such as raffle tickets or merchandise. The only time that such “donation” will be considered tax deductible is when the amount donated is more than the value of the benefit received. It has to be noted however that the allowable tax deduction shall only pertain to that difference in value.

Originally posted on December 2, 2012 @ 11:26 pm


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