It's getting time to get the new year started and old things sorted out especially in the financial world. The magazine Model Aviation has for a long time contained a statement that is not all-together true and should be revised. Since the AMA CFO usually takes a break for "Tax-Time" I always wondered just when he would get around to reducing that potential liability against AMA. Well friends and neighbors, I don't think he reads the magazine either.

So, in the Jan. '05 issue, page 188 are these statements. >>>" Did You Know... That any donation you make to AMA is tax- deductible? AMA is a 501(c)(3), not-for-profit association. This means that any funds you donate beyond your regular membership dues can be deducted from your taxes. Please considering donating to AMA. Your gift will help us continue our efforts to improve your organization." <<<<

There is no mention made of the limitations on such donations. The donations are of course applicable only to those that itemize their deductions vice taking the standard deductions.
In addition the main fallacy is that the deduction is only from your taxable income and NOT from your taxes.
Certainly your tax obligation is reduced by your tax bracket percentage of the donation amount, but to tell people "....can be deducted from your taxes." is IMO stretching things a bit, especially so in an association's official informational publication.

So, I would ask our AMA EVP (CFO) if he performs such an operation. Do you, Sir, compute your taxes due, then subtract any donation from those computed taxes and submit that sum to the IRS? [:-]

Hi Horrace

You have posted before that you have a pretty thorough understanding of tax law, and I won’t dispute that, however, a few minutes spent on the IRS site turned up some interesting information. A 501 (c) 3 entity requires NO disclosure statement on de minimis donations or solicitations. The term “tax deductible contributions� is used in many examples on the IRS site. It is not as clear to me that a life membership in the AMA meets the de minimis test. It is clear, however, that the statutes leave it to the donor, rather than the donee, to support claims, provide proof and records, and make determinations. I was surprised to find that in some situations, a cancelled check is insufficient proof of donation (generally, for larger donations). I also found that the term “tax deductible� has an entirely different definition than “tax credit�.

It is just my opinion, not being any kind of tax expert or anything, but the way I read the bulletins and statutes, the use of the term “tax deductible�, as opposed to “tax credit�, makes the wording on the AMA page appear to be acceptable. It lies with the donor to understand and apply the correct statutes. That may be the reason so many people use tax preparation services.

Since Doug Holland is not one of the EC members that reads this forum, so far as I know, I doubt your query will be answered. If I happen to see him this weekend at the AMA Convention, and I remember, I will ask about your inquiry, unless, of course, you were stating you were actually going to call him with your query.

JR

tax- deductible? Nothing new there old man. Standard term for contributions of that type. Pick up another dart and maybe you will get lucky one day[X(]

Yuck, JR, however I'm glad you learned something, although none of it is significantly new. That's all old hat stuff.
Checks went out several years ago. You need a letter from the donee for any deduction to taxable income. AMA sent me a letter for each of my donations, one to the building fund, and one to the Museum. Of course you received the same.

The term "tax deductible' is a well used term, and those that have the slightest understanding of the IRC, very well know its applications. There has never been any close relationship between a DEDUCTION and a CREDIT. It's good that now even you know that.

OTOH, "This means that any funds you donate beyond your regular membership dues can be deducted from your taxes." is, in a significant number of cases, a wrongful statement, and should not be published as a true item.
For those that are rather in the know of the current trends reference taxes and tort applications, now advertise, "The donation MAY reduce your taxes."
I cannot say that for used car sales as I don't travel in that medium.

On the other hand: JR I must apologize that I cause you to have to spend so much time on research. My "Federal Tax Course: A Guide for the Tax Practitioner" for the 2004 Tax Year arrived several weeks ago along with the "Special Supplement on The 2004 American Jobs Creation and Working Families Tax Relief Acts." The entire IRC will arrive within the next week.
However I ain't gonna' read it all![X(] Doesn't everyone subscribe to these or like publications?[>:]

I bought a C++ compiler some time back. It came with about 50 manuals. Probably 35 are still in the shrink wrap. Looks impressive as heck sitting in the bookcase, though.

While you may not like the statement in MA, I can't see anything that is legally incorrect, but, then I am not a lawyer, either.

Are you a lawyer as well as an EA?

I wish!

Unfortunately, I misspent my early youth mostly sitting on Alert, loaded with thermonuclear weapons for first class delivery against the Red Hordes should they decide "Today is the day." So we ain't speaking Russian today![X(]
What's a college-dropout to do? Too lazy to do much but play with toy airplanes and earn my way in an entertaining world where a little self taught home schooling can provide whatever one needs to know except for the paper in the frame on the wall.

Yep, Likewise those tax manuals immediately REVERSE the intimidation when one lays them on the table with all the records when in for an audit. Less tax -- more RC!

Hi Horrace

Every once in a while, you post something up that causes me to continue to have respect for you. I have always thought that if we were to meet in person, we might become pretty good friends.

This is one of those days.

JR

For cryin' out loud! Go get a room!