The Revenue Reconciliation Act of 1993 established certain relevant requirements regarding charitable donations. When making charitable contributions this year, taxpayers should be aware of certain pertinent rules that will affect the tax status of their deductions.

Where a canceled check used to be sufficient for deductions of $250 or more, written substantiation from the charity is now required. In addition, charities are now required to tell donors how much of a donation is deductible when the donor receives something in exchange for the contribution. This requirement applies to donations of over $75, where part of the contribution is for goods or services rendered by the charity. For example, a contribution to a charity that provides the contributor with a ticket to the charity's fund-raising dinner, obliges that charity to inform the taxpayer in writing what the dinner is valued at, and how much of the donation is tax deductible. A $250 donation for a dinner valued at $45 would entitle the taxpayer to a tax deductible contribution of $205, or the $250 minus the $45.

Under prior tax law, donating appreciated property created a tax preference item which could be subjected to the Alternative Minimum Tax (AMT). Donating certain types of appreciated property can now be done without concern for the AMT. Appreciated property affected by this change includes equity issues, bonds, works of art, collectibles, and/or real estate. Under the new law, taxpayers can take a deduction for the fair-market value of their appreciated property and not have the appreciation of the assets subjected to the regular income tax or the AMT.

Taxpayers planning frequent or sizable charitable donations should consult a tax advisor to be certain that they are conforming to the new rules. Failure to do so could jeopardize the tax deduction.

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