Memoradum-To-The-File Case Study
Memoradum-to-the-File
Date: January 31, 2013
From:
Re: The deductibility of Mal Manley’s charitable contributions.
Facts
Our client, Mal Manley, provided information in his individual income tax return client questionnaire to the effect that he made over 100 relatively small cash contributions totaling $25,000 to chartable organizations.
The IRS audited Mal’s tax return two years ago and denied 75% of that year’s charitable contribution deduction because the deduction was not substantiated.
Issues
The deductibility of Mal Manley’s charitable deductions depend on two issues: first, whether his cash contributions of less than $250 can be substantiated with a bank record, receipts, or payroll deduction records; and second, whether cash contributions of $250 or more, can be substantiated …show more content…
The IRS audited your tax return two years ago and denied 75% of that year’s charitable contribution deduction because the deduction was not substantiated.
Under the IRC cash contributions cannot be deducted, regardless of the amount, unless one of the following is kept: a bank record, a receipt, or payroll deduction records. Contributions of $250 or more can be deducted only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records.
Clearly, we currently lack the required documentation to make a claim for these deductions on your behalf. Because of this lack of documentation, we suggest that you check your records, contact your bank, and contact the recipient organizations in an attempt to produce the required documents, so we can dispel any doubt that may arise in the course of an IRS audit.
Please call me at 777-8888 if you have any questions concerning this conclusion. May I suggest that we meet next week to discuss the possibility of revising your Schedule
Date: January 31, 2013
From:
Re: The deductibility of Mal Manley’s charitable contributions.
Facts
Our client, Mal Manley, provided information in his individual income tax return client questionnaire to the effect that he made over 100 relatively small cash contributions totaling $25,000 to chartable organizations.
The IRS audited Mal’s tax return two years ago and denied 75% of that year’s charitable contribution deduction because the deduction was not substantiated.
Issues
The deductibility of Mal Manley’s charitable deductions depend on two issues: first, whether his cash contributions of less than $250 can be substantiated with a bank record, receipts, or payroll deduction records; and second, whether cash contributions of $250 or more, can be substantiated …show more content…
The IRS audited your tax return two years ago and denied 75% of that year’s charitable contribution deduction because the deduction was not substantiated.
Under the IRC cash contributions cannot be deducted, regardless of the amount, unless one of the following is kept: a bank record, a receipt, or payroll deduction records. Contributions of $250 or more can be deducted only if you have an acknowledgment of your contribution from the qualified organization or certain payroll deduction records.
Clearly, we currently lack the required documentation to make a claim for these deductions on your behalf. Because of this lack of documentation, we suggest that you check your records, contact your bank, and contact the recipient organizations in an attempt to produce the required documents, so we can dispel any doubt that may arise in the course of an IRS audit.
Please call me at 777-8888 if you have any questions concerning this conclusion. May I suggest that we meet next week to discuss the possibility of revising your Schedule