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Tax Tip Tuesday: A Charitable Donation Change Under The Tax Cuts and Jobs Act

This week we will take a look at another change brought about by the recent tax reform bill.

Old Law

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.

New Law

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.

Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Previous Editions of Tax Tip Tuesday
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