Charitable Contributions

  1. Charitable Contributions

    The IRS will treat a charitable contribution to U.S. disregarded single-member LLCs that are wholly owned and controlled by organizations described in IRC Sec. 170(c)(2) , as a contribution to a branch or division of the U.S. charity. As a result, the U.S. charity is the donee organization for purposes of the substantiation and disclosure requirements required by IRC Sec. 170(f) . The IRS encourages the charity to disclose in the acknowledgement, or another statement, that the single-member LLC is wholly owned and treated as a disregarded entity. This guidance became effective 7/30/12, but may be relied on prior to its effective date if the limitation period for refunds or credits has not expired. Notice 2012-52, 2012-35 IRB .

  2. Olympic Medal Winners

    IRC Sec. 61(a) provides that gross income includes income from whatever source derived, unless there is a specific exclusion. According to a Reuters article dated 8/2/12 entitled Will U.S. Olympic medalists get a tax break? : “Podium athletes get checks—$25,000 for gold, $15,000 for silver and $10,000 for bronze—and the winnings are taxable for Americans.” [Editor’s Note: This brings to mind former IRS Commissioner Mark Everson’s 2006 statement that Oscar goodie bags qualify as taxable income and must be reported on the celebrity’s tax return: “We want to make sure the stars ‘walk the line’ when it comes to these goodie bags.”] Furthermore, the medals themselves could be seen as valuable gifts that are taxable by the U.S. government. The article adds that the resulting tax liability would vary depending on the recipient’s income and tax status: “It could be as much as 35% for, say, basketball players who are already in the top tax bracket; for many athletes it would be less.”