Prop. regs. govern charitable contribution substantiation and reporting.

• Author: Nevius, Alistair M.

On August 6, the IRS issued proposed regulations that would change the rules regarding substantiation and reporting of charitable contributions (REG-14002907). The rules would implement changes made by the American Jobs Creation Act, P.L. 108-357, and the Pension Protection Act of 2006, P.L. 109-280 (PPA '06). The proposed changes would apply to charitable contributions occurring after the date the regulations are finalized.

The Service has asked for written comments on the proposed regulations to be received before November 5.

Cash Contribution Substantiation

PPA '06 added Sec. 170(f)(17), which provides that no charitable contribution deduction is allowed for any monetary gift unless the donor maintains, as a record of the gift, a bank record or a written communication from the donee. The bank record or a written communication must show the donee's name and the date and amount of the contribution (Prop. Regs. Sec. 1.170A-15).

The proposed regulations contain an exception to this rule for contributions of less than $250 made to a charitable remainder trust (Prop. Regs. Sec. 1.170A-15(g)). They also provide an exception for unreimbursed expenses of less than $250 that the donor incurs incident to the rendition of services to a charity (Prop. Regs. Sec. 1.170A-15(e)). However, the Service refused to follow the suggestion of one commentator and institute a blanket de minimis exception for small donations.

In cases where a bank statement does not include the name of the donee, the IRS says that the donor can satisfy the requirements of Sec. 170(f)(17) by providing along with the bank statement a photocopy (or other image obtained from the bank) of the front of the check, showing the name of the donee (Prop. Regs. Sec. 1.170A-15(b)(2)).

Noncash Contribution Substantiation

Donors who claim deductions for noncash contributions of less than $250 are required to obtain a receipt from the donee or keep reliable records (Sec. 170(f)(8)). The proposed regulations provide that donors who make noncash contributions worth more than $250 but less than $500 need only obtain a contemporaneous written acknowledgment and not other written records (Prop. Regs. Sec. 1.170A-16(b)).

Under Regs. Sec. 1.170A-13(f), donors who claim contributions of more than $500 but not more than $5,000 are required to obtain a contemporaneous written acknowledgment and file a completed Form 8283, Noncash Charitable Contributions. The proposed regulations do not alter this...