Charitable donations can cost taxpayers dearly if they don’t obtain the right documents accompanying their gifts, according to news reports.
Martha Albrecht, for example, had to return the entire $463,676 she had claimed in deductions after donating around 120 items from her and her late husband’s collection of Native American jewelry and artifacts to the Wheelwright Museum of the American Indian in Santa Fe, New Mexico, the Wall Street Journal writes.
While her tax return had a five-page Deed of Gift detailing the donation, Albrecht didn’t include a “contemporaneous written acknowledgment” — a letter from the museum stating whether or not she received goods or services in exchange for her gift, according to the publication.
The requirement has been in place since 1994, enacted by Congress to go after padded and suspicious deductions, the Journal writes.
The museum eventually clarified that there were no goods or services exchanged for her donation, but it was too late, according to the publication.
In ordering Albrecht to return the money, United States Tax Court Judge Travis Greaves noted her good-faith effort to comply but said she nonetheless didn’t abide by with the rule, the Journal writes.
Gregory MacNabb of Plattner, Schneidman, Schneider & Jeffries, Albrecht’s attorney, said his client declined to comment on the decision and is considering an appeal, according to the publication.
The Journal suggests that gift-givers carefully study Internal Revenue Service rules on charitable giving and ensure they comply with all the paperwork requirements.
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