Tax Tip Tuesday: A Charitable Donation Change Under The Tax Cuts and Jobs Act
March 27, 2018
This week we will take a look at another change brought about by the recent tax reform bill.
When a taxpayer made a monetary donation to a college or university that counted as a charitable donation, they would sometimes get the right to buy tickets to sporting events that they wouldn’t have access to without the donation. Before the Tax Cuts and Jobs Act law was passed, 80% of the ticket price was treated as a charitable contribution. The 80% rule applied whether or not tickets would have been readily available to the taxpayer without making the payment and even if the seating was located in a special viewing area within the athletic stadium.
If a part of a payment was for the purchase of the tickets, then that part was treated as a separate amount. The 80% deduction rule above didn't apply if the taxpayer received tickets or seating, rather than the right to buy tickets or seating, in return for the payment.
Allowing 80% of the contributions to be deducted was an exception to the requirement that a charitable contribution not be made in exchange for a benefit to the donor commensurate with the money or property transferred.
Under the Tax Cuts and Jobs Act, effective in 2018, no charitable deduction is allowed for a payment to a college or university in exchange for which the contributor receives the right to purchase tickets or seating at an athletic event.
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