Wednesday, November 14, 2012

Season of Giving

Article for your reproduction:   The Rocky Mountain United Methodist Foundation gives full permission to reproduce this article in any United Methodist Church publication, newsletters or websites in the Rocky Mountain United Methodist Conference. For an electronic version of this article, please email the Foundation at

October 31, 2012
By Kristi Kinnison, Executive Director of the Rocky Mountain United Methodist Foundation, Inc.

I have seen the red and green signs of Christmas, right next to the black and orange signs of Halloween. Let the holiday shopping season begin!

My very best friend, Jesus, needs a birthday present, too. He even has a gift registry for me to consult, in case I don’t quite know what to get. It is called the Bible, and with the help of my pastor and church, I can find gift ideas in there. Did you know words about giving appear more than 2,000 times in the Bible? Here is my favorite one, especially in remembering the reason for the season:
“For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.” John 3:16
Gifts given to God through our church and to our loved ones are a way of letting His light shine through us. Gifts are symbolic of our commitment to Him, a way to follow the commandments and a way to say thank you to God for the abundance we enjoy. Gifts to our church will help continue to make disciples of Jesus Christ for the transformation of the world.
Here are some ideas for you to give this year:
1.       Make a commitment to give to your church and/or favorite charity in 2013; weekly, monthly, quarterly or annually. (It is never too late to make a pledge.) Pay it forward – you can prepay all or part of your pledge by December 31, 2012 to receive tax benefits in 2012.*
2.       Give property (real estate, bonds, stocks or mutual funds.) By donating these directly to your church or charity, you will avoid capital gains taxes AND you can deduct the full market value on your income taxes. The Foundation can help you process these donations through its brokerage account.*
3.       Make a gift in honor or in memory of someone special who touched your life this year.
4.       Consider a gift to your church’s endowment fund either today or in your will. This type of gift keeps on giving because it helps build a financial foundation for your church. The church will be able to use the interest income from your gift for many years to come.
5.       Making a commitment to your favorite charity doesn’t necessarily mean giving money – you can also pledge to give some extra time to help out wherever your skills and passions may best be used.
Everything comes from God – our time, our talents, our money, our resources; we are simply stewards of the gifts that God provides. “I will bless you so that you may be a blessing.” (Genesis 12:2) Take some time this season of Advent to reflect on what that means in your life.
*consult your tax advisor for details about tax deductible gifts.
The Rocky Mountain United Methodist Foundation provides financial services to churches, institutions, and agencies, as well as provides tools and resources to individuals seeking to be faithful stewards. Contact the Foundation at 303-778-6370, or

Tuesday, November 6, 2012

Church Causes Donors to Lose IRS Charitable Deduction: Are your donors at risk?

On May 17, 2012, David & Veronda Durden v. IRS, the courts ruled that the Durden’s $22,517 donation to their church could not be counted as a charitable tax deduction.

On their 2007 joint income tax return, Mr. and Ms. Durden claimed a deduction of $22,517 for charitable contributions of cash and checks to their church.

The IRS denied the Durdens’ deduction because they did not have the proper acknowledgement of their contributions from the church. The Durdens sued in Tax Court arguing, among other things, that they “substantially complied” with the statutory acknowledgment requirements. They had statements acknowledging the gifts from their church, along with canceled checks, and produced these as evidence. The court disagreed with the Durdens and did not allow their deduction.

The courts said that the acknowledgement did not contain the wording, “no goods or services were received in exchange for this gift.” 

The church attempted to issue new acknowledgements to the Durdens, however these were not allowed. The courts referred to tax code that states that the acknowledgements must be issued on or before the filing due date, or the date that the filing is made.

Is your church in compliance?
In order to protect committed church members from a fate similar to the Durdens, church acknowledgements must contain amount (value) and date of the gift, along with one of the following phrases:
“No goods or services were provided in exchange for your contributions,” or

“No goods or services were provided in exchange for your contributions other than intangible religious benefits.”

Information about goods and services received from the church is important because, generally, a donor must reduce the amount of the contribution deduction by the fair market value of the goods and services provided by the church. This provision was added to the tax code in 1993 to curb some abuses.

Refer to the following IRS tax codes:

26 USC § 170 - Charitable, etc., contributions and gifts
    (f) Disallowance of deduction in certain cases and special rules
        (8) Substantiation requirement for certain contributions
            (A) General rule
No deduction shall be allowed under subsection (a) for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of subparagraph (B).
            (B) Content of acknowledgement
An acknowledgement meets the requirements of this subparagraph if it includes the following information:
    (i) The amount of cash and a description (but not value) of any property other than cash contributed.
    (ii) Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i).
    (iii) A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.
For purposes of this subparagraph, the term “intangible religious benefit” means any intangible religious benefit which is provided by an organization organized exclusively for religious purposes and which generally is not sold in a commercial transaction outside the donative context.

26 USC § 170 - Charitable, etc., contributions and gifts
    (f) Disallowance of deduction in certain cases and special rules
        (8) Substantiation requirement for certain contributions
            (C) Contemporaneous
For purposes of subparagraph (A), an acknowledgment shall be considered to be contemporaneous if the taxpayer obtains the acknowledgment on or before the earlier of —
(i) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or
(ii) the due date (including extensions) for filing such return.
The court case referred to was David P. Durden and Veronda L. Durden v. Commissioner. The Memorandum Opinion was issued by Judge Cohen of the U.S. Tax Court, Dkt. No. 17441-09, TC Memo. 2012-140 on May 17, 2012.