Re: Tax Deductibility?
Bruce E. Cobern (bec@PIPELINE.COM)
Sat, 28 Oct 1995 11:18:00 -0400
On Oct 27, 1995 22:50:02, 'Ted Burton <firstname.lastname@example.org>' wrote:
>Second, there has been one minor TILT in what I have seen here on this
>topic, namely the notion that contributions to a "nonprofit" organization
>are deductible. NOT SO.
This is correct. There are many nonprofit, tax-exempt organizations,
contributions to which are not deductible.
>Nonprofit organizations exempt from tax under Section 501(c)(3) of the
>Internal Revenue Code are only exempt from tax; contributions to them are
>For contributions to be deductible, the receiving organization must be one
>described in Section *170* of the Code. These are, if I remember correctly
>without having Section 170 in front of me, government, religious, and
>educational organizations. BSA probably goes under the 'educational'
Here, Ted, you are both correct and incorrect. You are correct in that in
order fot the contribution to be deductible it must be made to an
organization that qualifies under Section 170. However, again without my
copy of the Code in front of me, I believe that ALL Section 501(c)(3)
The error is in the earlier paragraph. In order to be tax-exempt the
organization need only qualify under any of the subsections of Section
501(c). Thus organizations that qualify under (c)(8), for example, are
also tax exempt but not eligible to receive deductible contributions. I
believe (c)(8) is either social clubs or fraternal organizations, but the
exact subsection is not important. It IS true that many units are
sponsored by organizations that are tax exempt under subsections other than
(c)(3) and thus not eligible to receive deductible contributions.
Now, here comes some professional heresy. While the above may be the
letter of the law the practical matter is that most revenue agents, IMHO,
will not challenge the deductibility of reasonable checks made payable to
"Troop X, BSA" unless they suspect that there are problems with the
charitable contributions in general. This is not tax advice, merely a
statement of my impression from 20+ years of tax practice.
The other thing that is interesting is the apparent dichotomy when it comes
to sales taxes. While the deductibility of contributions looks to the
sponsor, many states provide blanket sales tax exemption to units under the
exemption of the council. I believe NY is one of them which no longer
requires each unit to apply for its own number, even though most already
have them and many new units still apply.
Sorry for the length of the reply. I feel like I'm back on misc.taxes, one
of the newsgroups I read.
Bruce E. Cobern, CPA
MC, Troop 1, Flushing
Dad's Club of Troop 1, Flushing, Inc.
A 501(c)(3) organization
Terry Howerton Sakima Group, Inc. SCOUTER Magazine Kansas City