Tax write off

[Crossramwedge]

Eagle Scouts have to use the donated services of various suppliers and professionals on many of their projects. Just a few of these donations would include supplies, architecturial drawings or chargeable time for advice. Lets say one of these people wanted a tax receipt for their services. The supplies are one thing but how about charges for plain advice? Are the donations made to a individual Scout for his Eagle project a legal tax write off? Just curious.

[AlFansome]

 

I'm not an accountant, but I would imagine that the deductibility would depend on the 501©(3) status of the Troop's chartered organization or the status of the group benefitting from the project (if any).

 

Technically, the troop is owned by the Chartered Org and inherits any tax status from the CO. So, if a Troop is chartered by a church (for example), any donation to the Troop is treated the same as a donation to the church. Ideally, a Troop would be allowed to use the church's Tax ID number (EIN/TIN) and either the Troop or Church could generate a receipt.

 

If a Troop isn't chartered by a 501©(3) group but the project benefits a 501©(3) org, then maybe a receipt from that group might be possible.

 

If no 501©(3)'s are involved, then there's been no donation to a charitable org and no charitable deduction.

 

However, businesses can deduct contributions to 501©(4) groups (such as Kiwanis or Lions) as business expenses, so that may be another option.

 

This, of course, assumes that contributions to Eagle projects are the same a contributions to the Troop...not sure on that one, although it would seem to make sense.

 

Clear as mud, right?

 

[Beavah]

Lets say one of these people wanted a tax receipt for their services.

 

Sorry, there's no tax deduction for donatin' your time, labor, or advice, eh?

 

Only for donatin' money or goods.

 

Beavah

 

[scoutldr]

When people have donated to my troop in the past and requested a receipt, I just write them a nice thank-you letter specifying what they did, or the amount of money donated. If it was a donation of goods, I do not put a value on it...that's up to them. What they do with the letter is between them and the IRS. As for us individual volunteers, Beavah is correct...time is not deductible.

[Frank17]

As long as your sponsoring organization is a non-profit / tax-exempt, any donations to the scouts that are chartered through them are also potentially tax deductible. Donating to the troop / pack is the same as docating to the church / organization that sponsors them. A receipt on Troop letterhead is usually sufficient documentation.

 

"You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions." (IRS Publication 78)

 

Note that (as others have mentioned) professional or volunteer service time is NOT tax deductible, but any materials used in performing the service ARE deductible. (example: A electrician spends 2 hours wiring lighting into a boy scout trailer: his time is not deductible but the cost of the wire, lights, etc. are deductible).

[evry]

As several previously stated, money and the Fair Market Value of any goods donated is tax deductible, but your time, services, advice etc. is NOT tax deductible.

 

I believe that mileage is also tax deductible.

 

This brings me to my question....and sorry if I'm hijacking the OP's thread.

 

This past summer, I was one of our Troop's leaders at the Summer Camp where my son also attended. His fee was $200...my fee was $100. I drove out to the camp (appx. 70miles). I'm wondering if I am correct in saying that my fee ($100) plus the mileage (round trip 140 x $0.55 = $77) are deductible contributions, while my son's $200 fee is not. Does anybody else concur with this...or disagree?

 

[scoutingagain]

I don't know about your camp fee, possibly, as it might be considered an "out-of-pocket expenses you paid to do volunteer work" but while your milage is deductible, it is not deductible as a business expense at $0.55/mile. It is deductible at a different rate meant only to compensate you for your out of pocket expenses. I'm not sure what the 2009 rate is, but it's more like $0.14/mile, not the rate you show.

 

I'm not an accountant so ask one about the camp fee.

 

SA

 

From Instructions for Schedule A,Itemized Deductions

Gifts to Charity

Contributions You Can Deduct

Contributions can be in cash, property, or out-of-pocket expenses you paid to do volunteer work for the kinds of organizations described earlier. If you drove to and from the volunteer work, you can take the actual cost of gas and oil or 14 cents a mile. But, if the volunteer work was to provide relief related to a Midwestern disaster area, the amount is 36 cents a mile (41 cents a mile after June 30, 2008), see Pub. 4492-B for more details. Add parking and tolls to the amount you claim under either method. But do not deduct any amounts that were repaid to you.

 

 

 

 

[BadenP]

As a former IRS agent I will offer this, if the XYZ Church sponsors Troop 222 and a person donates material to scout Johnny doing an Eagle project that donation is to the scout not the troop or the church and therefore is not tax deductible since it does not benefit the church which is the only legal 501c3 entity. The troop can not legally use the EIN of their sponsoring church since they are considered seperate legal entities, the troop can file for their own EIN number, if they meet certain requirements, but that is a bigger hassle than its worth.

 

An EIN can only be used by the organization it was issued to, not an affiliated organization which a boy scout troop is considered to be, and I can tell you from first hand experience if the person claiming the deduction gets audited the letter from the troop using the EIN of the church not only will the deduction be denied but the church would also be contacted by the IRS and receive a warning letter for violating the terms of a 501c3 status organization.

 

The only exception to this would be that the project directly benefitted the church and the person got a letter on the Churchs letterhead signed by the pastor or other church official. This is because in that case the donation would be recorded in the churches records and could be substantiated by the auditor.

[scoutldr]

evry...I disagree. I believe your camp fee is considered "room and board" for which you received something of value, and is, therefore not a donation. Neither is your son's camp fee. Your mileage, uniforms and equipment may be, if they are not suitable for use in settings other than scouting.

 

However, I am not a CPA, lawyer or IRS agent.

[dancinfox]

BadenP is correct on his assessment of a 501c3. In regards to the deductibility of a camp fee. If you are on duty 24/7 at camp it is not considered a vacation so the fee would be deductible (ie: if you were to travel to the National Jamboree as a leader, you are on duty 24/7 and your fee would be deductible. We had a case where a troop asked for donations to purchase a new troop trailer and the letter stated the donation was tax deductible. I informed the SM that unless the donation was made to the church and the church purchased the trailer for the troop, any donations made by businesses or individuals were not tax deductible.

Dancin

[Oak Tree]

To follow on to scoutldr's comments,

 

Quoting Schedule A instructions: If you made a gift and received a benefit in return, such as food, entertainment, or merchandise, you can generally only deduct the amount that is more than the value of the benefit.

 

So, does your camp fee just cover the value of the room and board? I'm thinking the value of the board is pretty low, and the food's not too high, either. But you only paid $100. Let's see, 17 meals and 6 nights in a leaky two-man canvas tent. At $3 a meal and $3 a night, that's $69.00. Deduct the other $31.00? Save $8.68 on your taxes.

[dancinfox]

Additional information from Publication 526

 

Travel. Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. This applies whether you pay the expenses directly or indirectly. You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses.

 

The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses.

 

Example 1.

 

You are a troop leader for a tax-exempt youth group and you help take the group on a camping trip. You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. You participate in the activities of the group and really enjoy your time with them. You oversee the breaking of camp and you help transport the group home. You can deduct your travel expenses.

 

Dancin

[Oak Tree]

BadenP,

 

There's so much rich content in your post I hardly know where to start to ask you to explain further.As a former IRS agent I will offer this, if the XYZ Church sponsors Troop 222 and a person donates material to scout Johnny doing an Eagle project that donation is to the scout not the troop or the church and therefore is not tax deductible since it does not benefit the church which is the only legal 501c3 entity.Ok, so if the person writes a check to Johnny Scout, then I think we could all see that would be non-deductible. But the donor could also write the check to XYZ Church, or to Troop 222, or to the recipient of the project, let's call it Non-profit ABC. Any of those could pay for the project.

 

If the donor writes the check to Non-profit ABC, also a 501c3 entity, wouldn't that also be deductible? Churches spend their money on community projects all the time. Aren't gifts to the church that are used for community projects also tax-deductible?The troop can not legally use the EIN of their sponsoring church since they are considered seperate legal entities, the troop can file for their own EIN number, if they meet certain requirements, but that is a bigger hassle than its worth.What is the distinction that makes something a separate legal entity?An EIN can only be used by the organization it was issued to, not an affiliated organization which a boy scout troop is considered to be, and I can tell you from first hand experience if the person claiming the deduction gets audited the letter from the troop using the EIN of the church not only will the deduction be denied but the church would also be contacted by the IRS and receive a warning letter for violating the terms of a 501c3 status organization.Is the church choir an affiliated organization? What is the test that makes something an affiliated organization?

What if the church considers the Scout troop to be a part of the church, and issues a statement on church letterhead?The only exception to this would be that the project directly benefitted the church and the person got a letter on the Churchs letterhead signed by the pastor or other church official. This is because in that case the donation would be recorded in the churches records and could be substantiated by the auditor.Ok, no problem there. Everyone agrees that a donation to the church that benefits the church and is documented by the church is tax-deductible.

 

What about dancinfox's situation? If someone donates $2500 to the church with a memo line "for your Scout troop", is that donation tax-deductible? Does that donation benefit the church? It seems like you're saying that if the donation doesn't directly benefit the church, it's not deductible. But surely there is some way to donate money to a Scout troop that is tax-deductible. The Schedule A instructions specifically list Boy Scouts as an example of a qualified charitable organization.

 

(Edited formatting)(This message has been edited by Oak Tree)

[AlFansome]

BadenP-

You say... "The troop can not legally use the EIN of their sponsoring church since they are considered seperate legal entities, the troop can file for their own EIN number, if they meet certain requirements, but that is a bigger hassle than its worth. "

 

Maybe you were referring specifically to 501©(3), but in the general case my question would be then which EIN should the Troop use for things like it's bank account? I've always read that the Troop can either use it's CO's EIN or get one for itself. Getting an EIN takes a few minutes online, but then implies filing a 990 form at tax time. Each troop and pack has to have an EIN of some sort...so it's either the CO's EIN or one they get themselves.

 

Some other places on the web where it says to use the CO's EIN if possible:

 

http://bsa-la.org/miscellaneous/tax-exempt-status.html

 

http://www.gpc-bsa.org/finance/unittaxexemptstatus.asp

 

http://www.bsasavannah.org/PDF%20Forms/Unit%20Tax%20&%20Process/UnitTaxStatusFAQs%5B1%5D.pdf

 

As a Chartered Rep, we've gone around and around on this in our Board of Director's meetings. If a unit uses our EIN, then we as the CO need to roll up their finances into our filings. If a unit uses their own EIN, then a separate 990 would need to be filed. (BTW, we're 501©(4), not 501©(3) as of now).

 

Edited to add: 990 filings are only necessary for units with > $25k in receipts, so this wouldn't affect most units, I guess.

 

From what I've seen, it can go either way according to docs from several BSA councils.

(This message has been edited by AlFansome)

[Beavah]

Yah, sorry BadenP, I reckon any good tax attorney would take that case pro bono and da IRS would lose.

 

The troop is not an affiliated organization, it is a youth ministry run by the church. Exactly da same as a church youth group. The fact that the church contracts with the BSA for support services for their youth program is irrelevant, and a claim that a group whose leadership is selected and approved by church-appointed officials is somehow a separate unregistered unincorporated association is completely spurious.

 

I also reckon it's well established law that churches do in fact gain benefits which are consistent with their charitable purposes by runnin' youth programs.

 

Now the particulars of whether a donation to an Eagle Scout project is a donation to the troop/church's youth program or a donation to the agency that is benefiting from the lad's project is a question of fact, eh? But in either case it's likely deductible. Unless there's somethin' really unusual goin' on, this is goin' to be a non-issue.

 

My fee was $100. I drove out to the camp (appx. 70miles). I'm wondering if I am correct in saying that my fee ($100) plus the mileage (round trip 140 x $0.55 = $77) are deductible contributions, while my son's $200 fee is not.

 

Yah, correct that your expenses for serving as a troop leader (not just a parent) are deductible, as well as your mileage at the charitable mileage rate (or actual gas expenses).

 

Best guide out there for Scouting and taxes was put together by Tom Turba, an accountant and tax professional and scouter. Tom's been kind enough to keep it up to date for the scoutin' community. Here's the last link to it I had, but I reckon there's a new one out there.

 

http://www.troop957.com/docs/misc/Scouting-and-Taxes-Apr08.pdf

 

Beavah

Of course, nothing in this message should be construed as legal opinion or advice. For authoritative answers on a tax-related question you should consult with a tax attorney familiar with your case, or a CPA in your area.