When Goods and Services are Involved
A payment to a charity
qualifies as a deductible gift only to the extent that it exceeds the fair market
value of the privilege or benefit the "donor" receives in return for that gift.
For example:
One cannot deduct
the full amount paid to a charity for such items as candy or magazines. If
the charity charges $10 for a box of candy that normally sells for $8, only
$2 can be claimed as a charitable contribution.
The purchase
price of tickets to a fundraising dinner, circus, or other meal or entertainment
event is not fully deductible. Only the portion of the ticket price above
the value of the meal or entertainment can be deducted for income tax purposes.
The same rule applies even if, at the suggestion of the soliciting organization,
the donor decides to let the charity give his or her tickets to underprivileged
or disabled children.
Likewise,
even if the charity refers to the entire purchase price as a "donation," the
portion of the price that reflects the value of the admission is not deductible.
Membership dues
that merely cover the cost of privileges or benefits received by the "donor"
are not deductible. However, "dues" that actually constitute a contribution
for which the donor receives little or no privilege or benefit of monetary
value in return are deductible.
The price of
participating in a raffle or similar drawing cannot be deducted as a charitable
donation.
