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Is a ticket to Fundraising Benefit Gala Tax Deductible? If so, how much, or is there a calculation?

Moorestown, NJ |

I am planning a fundraising gala for a non-profit organization and I would like to know if a person or company purchases a ticket for $250, is that ticket tax deductible as a it is going to a verified 501(3)(c) non-profit organization. I have seen various things about the situation, but since I joined this site, hoping that the answer can be from a Tax Attorney. I would like to include the law or irs quote statute in our promotion materials if it is. I think I saw something about the fair market value, but the mark-up is only $75 per ticket, so would the tax credit be $175? Again, I don't know so hopefully someone can advise on this matter. Thank you in advance.

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Attorney answers 4

Posted

Typically you can deduct 501c3 donations; if you fall into alternative minimum tax (complex analysis) sometimes deductions are limited.

This answer is based on general legal principles only and is not intended to provide specific legal advice. This answer is for informational purposes only and does not constitute the formation of a lawyer-client relationship. Any reader of this answer should not make decisions based upon in without first directly consulting with an attorney

Asker

Posted

How would I know if our non-profit falls into alternative minimum tax (complex analysis)? So in my example: If the ticket costs $250 what is the actual value of the deduction? Basically, I have no idea what deductions mean anyway, so maybe that's the problem... LoL... when it says, "that donation is tax deductible" What is it tax deductible from? Earnings, Taxable Income, I'm not sure... thanks in advance Kevin for your response.

Kevin Matthew Sayed

Kevin Matthew Sayed

Posted

Good question but let me clarify. It's the taxpayer buying a ticket from a charity that cannot deduct the contribution, ie buying a ticket, because of alternative minimum tax. As a nonprofit you can generally do fundraiser a to support your charitable goal and the prceeds Earned are not treated as tAxable income due to your nonprofit status, but you might need state or loacL permits to conduct the fundraiser legally.

Martin L Bearg

Martin L Bearg

Posted

With all due respect for Mr. Sayed's attempt to help you, the response of Mr. Warshaw and Mr. Davidoff are more accurate. While a cash donation to a 501(c)(3) non-profit is tax deductible within limits, when one gets something in return that exceeds $25, the payment is only deductible to the extent the amount paid exceeds what has received. In fact the IRS requires that every receipt expressly state that no service or anything of value was provided to the donor, or, as in your case, acknowledge the receipt of $250 and that the meal, music, etc. had a value of $xxx.

Posted

The purchasers of the tickets can secure a charitable deduction for the excess of the ticket price over the direct costs of the gala for each person. There is standard language you must provide in your acknowledgment and the CPA for the 501(c)(3) organization can assist you with that language.

Marty Davidoff, emd@taxattorneycpa.com, 732-274-1600. This answer is provided for general information only. You should seek advice from an attorney or tax professional.

Posted

Whatever value you receive in exchange for your ticket is not deductible. The excess is considered a charitable donation. What is the value of the dinner that the ticket buyer is receiving? In your situation, it appears that the dinner/gala/function has a value of $175 and the extra charge is $75. This would make for a charitable deduction of $75.00. Consult with a tax lawyer or CPA to get specific advice on your situation.

The content of the this submission is intended to provide general information on the topic presented, and is offered with the understanding that the author is not rendering any legal or professional services or advice. This submission is not a substitute for legal advice. Should you require such services, retain competent legal counsel.

Posted

I agree with Mr. Davidoff and Mr. Warshaw, and would add one more point. While it is true that the charitable deduction would be limited to $75, the $175 component of the price may be deductible on another basis. For example, it may be possible to deduct the entire price as a marketing expense if attendance benefits the taxpayer's business. Each individual attendee should consult with his/her tax professional to assess this issue.

This answer is given for educational purposes only. Unless and until I agree in writing to become your lawyer, nothing I say should be interpreted as legal advice.

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