Documentation of donation for IRS

[lmaltin]

Last year, the rules for certain charitable contributions were tightened. Starting 2007, charitable contributions of cash to any qualified charity must be supported by a dated bank record (such as a
canceled check) or a dated receipt from the charity (such as OLPC) that must include the name of the charity, date and the amount of the contribution. Our word as taxpayer no longer counts, we need written proof.

Remember, regardless of when you receive your computer, if your donation was made in tax-year 2007, that is the year for which you are permitted to claim your deduction. When will OLPC be sending documentation? It is only a short time till tax day.

[pgf]

i believe OLPC thinks that they've already sent you your receipt, right after getting your donation. the text of this email read:

From: "OLPC Customer Care" <service@laptopgiving.org>
Subject: Thank You for Donating to One Laptop per Child

Thank you for participating in the One Laptop per Child "Give One Get One" program. Your donation of $399.00 will bring education and enlightenment to children of the developing world. $200 of each $399 "Give One Get One" Donation is tax-deductible (your donation minus the fair market value of each laptop you receive). With Shipping and Handling, the total charge to your credit card is $423.95.

As a "Give One Get One" donor, you will receive one of the first XO laptops to be distributed in North America. Laptops will be delivered on a first come, first served basis. While early purchasers have the best chance of receiving their XO laptops in time for the holidays, quantities are limited and we cannot guarantee timing. We will provide you with regular email updates.

If you have any questions about your donation, please contact OLPC at service@laptopgiving.org or call 1-800-201-7144. Should your employer wish to match your donation, we are a 501(c)(3) organization and our EIN# is 20-5471780.

T-Mobile USA is proud to offer you one-year complimentary access to T-Mobile HotSpot in recognition of your support to the One Laptop per Child "Give One Get One" program. As you help children in developing countries stay connected, educated and enlightened, T-Mobile is supporting you! You will receive an email message close to the time that your laptop ships containing instructions on how to begin your complimentary year of T-Mobile HotSpot service. Please refer to http://hotspot.t-mobile.com for additional information on T-Mobile HotSpot Wireless broadband Internet service.

To find out more about the mission of One Laptop per Child, please visit http://www.laptop.org. To review "Give One Get One" terms and conditions, please click here.

Thanks again for your generous support, and welcome to the One Laptop per Child community!

Sincerely,

Nicholas Negroponte

Chairman

OLPC Foundation

One Laptop per Child Foundation is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. Your donation is tax deductible to the extent provided by U.S. law. This receipt is not valid if your donation is refunded for any reason. Additional information about the foundation is available from http://www.laptop.org or the foundations registration office of your State.

One Laptop per Child

P.O. Box 425087

Cambridge, MA 02142

[lmaltin]

If OLPC believes it has already provided such documentation as you point out, it behooves OLPC to mark the "thank you email" with an advisory such as: this is an important tax reporting document for your donation, or this is the documentation for your tax reporting, or some similar such advice.

Also, I'm not a tax expert, but I would suspect that T-Mobile's free one-year service, valued at $350 is a double-edged tax headache.

[WhatsHisName]

Following up on lmaltin comments, it would appear to me, after rereading IRS Publication 526 Charitable Contributions, that acceptance of the free T-Mobile service will eliminate the G1G1 charitable contribution deduction.

From IRS Pub. 526 Contributions From Which You Benefit:

If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive.

Obviously, this is how the stated donation amount of $200 is derived: Total donation minus the Get One value. However, since the most minimalistic interpretation of what constitutes a one-year T-Mobile HotSpot service (see: http://hotspot.t-mobile.com/services_plans.htm) would be a $240 benefit, then the benefit will exceed the amount of the donation.

Or in plain English:

Accept the free T-mobile service and your G1G1 tax deduction may become $0.

It would be interesting to hear what OLPC's tax advisors think about this or about the value of the free T-Mobile service.

One more downside: The IRS may assume that anyone listing a G1G1 deduction also accepted the free T-Mobile service, thus potentially subjecting you to an automatic audit. Even if you decline the free T-Mobile service, don't be surprised when the IRS audit letter arrives in the mail. How much fun it will be to provide nonexistent documentation to the IRS proving you declined the free service.

Be sure to consult your tax advisor before deducting your G1G1 contribution.

WhatsHisName

Day One G2G0

P.S. Never got the email stating the contribution amount. First contact ever from OLPC was in mid January. Order was placed on Nov. 12th.

[oddgeezer]

Added as an edit: WhatsHisName has revised his post to the point of making my post (below) redundant. . . essentially now, we just agree. I'll let my post stand, with this remark made as an edit.

The normal acknowlegement of a donation says something to the effect, we have not furnished the donor any goods or services in return for this donation.

The OLPC email should make this clear (it better!) and attach the service (T-Mobile HotSpot) to the hardware purchase part of the transaction.

That "value" that they attach to the T-Mobile Hotspot service, could cause a REAL problem! On the face of it, they are returning to the donor goods and services which more that cover the $ value of the donation, so it doesn't qualify as a irs donation deduction.

IMHO

P.S. While I was composing my message above, WhatsHisName posted his message in this thread. I think it could be even worse than he says. Since IRS decisions favor the IRS, the offering of this presumably valuable service (T-Mobile Hotspot) may invalidate the deductibility of the donation, whether the service is accepted or not. There will probably be precedents to settle this particular point.

[jfbrown42]

*bump*

Happy Tax Day to everyone in the US!

When I was doing my taxes last night, my charitable contributions did seem a bit low. This morning, on the drive in to work, I remembered G1G1. I wonder if this is worth filing an amended return over?

[doug]

so has anybody talked this over with their tax rep and what was the determination(s)? Thanks.

[Kari]

I doing some research for somone who wants to donate to OLPC. It seems to me that contributions to the foundation are tax deductible but purchasing computers is not. Does anyone know if the donor only purchases computers for others (and not the buy one get one program which includes the free hot zone) whether that contribution is tax deductible? I can't find any indication that it is...

The EIN in the letter cited refers to the Foundation and not the organization, OLPC Inc. (the latter of which is a 501(c)4 civic org and not tax-deductible.) Looking at the tax return for the Foundation, the goal is to build the grassroots infrastructure to support programs for the computers- it doesn't say anything about donating computers. Unfortunately, the phone number listed below is out of order.

"If you have any questions about your donation, please contact OLPC at service@laptopgiving.org or call 1-800-201-7144. Should your employer wish to match your donation, we are a 501(c)(3) organization and our EIN# is 20-5471780."