Document, document, document: A cautionary tale
Written by Clark Collier, CAP(R), CICF Director of Giving Strategies
Charitable deductions may increasingly land on the IRS’s radar, especially as the IRS begins to deploy even more AI-powered audit tools and the One Big Beautiful Bill Act (OBBBA)’s 0.5% AGI deduction floor and new charitable deduction caps kick in next year. As an advisor, you’ll likely want to step up your efforts to ensure that clients’ contributions are impeccably documented.
This is not just a theoretical concern, as the taxpayer in Besaw v. Commissioner can attest. In this recent Tax Court case, the taxpayer claimed $6,760 in noncash charitable deductions for 2019, accompanied by Form 8283 and receipts from charities. Although receipts were dated and signed, they failed to specify the donated items or their values. Subsequent attempts by the taxpayer to retroactively reconstruct item descriptions and values were rejected by the court. Consequently, the court disallowed the entire deduction—even though it acknowledged that the donations themselves indeed occurred.
So what’s important about this case? A few things:
“I meant well” won’t cut it.
The ruling underscores that intent alone does not satisfy IRS requirements. Even with proper forms and reasonable documentation, omissions—such as blank receipt fields for item description or value—are fatal. Additionally, postfiling supplementation of documentation (“reconstructed” evidence) is not acceptable in lieu of contemporaneous recordkeeping.
Document it like you calculate it!
As one advisor put it, “Good intentions aren’t enough—you need good documentation.” For those who advise charitable clients, the takeaway is clear: you must treat documentation with the same rigor as tax calculations. Ensure that, at the moment of donation, charities provide receipts that include a reasonably detailed description of each item (what it is, quantity, condition); the fair market value of each item; “no goods or services provided” language where applicable; and a fully-completed Form 8283 that is filed on time with any required appraisals.
Consider centralization to help avoid missteps.
For many of your charitable clients, the CICF Collaborative (which includes Central Indiana Community Foundation, Hamilton County Community Foundation, IMPACT Central Indiana, the Indianapolis Foundation, and Women’s Fund of Central Indiana), can serve as a helpful “hub” for all charitable giving. Your client can use a variety of vehicles to support multiple causes and charities through a single, trusted partner. Because the CICF Collaborative can accept cash, stock, and other property, we can effectively “consolidate” your contributions and provide streamlined record-keeping, often resulting in just one or a few receipts for tax reporting. This simplifies compliance, reduces paperwork, and gives your clients (and you!) the confidence that their philanthropic intentions are both efficiently managed and properly documented–especially when tax time rolls around.
We look forward to working with you! Please reach out anytime!
About the CICF Collaborative
CICF Collaborative is a partnership of philanthropic organizations working together to strengthen communities across the region. Each entity within the CICF Collaborative (including the cornerstone entities, Central Indiana Community Foundation, Hamilton County Community Foundation, IMPACT Central Indiana, the Indianapolis Foundation, and Women’s Fund of Central Indiana) brings deep knowledge, strong relationships, and its own individual, focused mission. The CICF Collaborative unities the entities by providing shared services, allowing the entities to operate more efficiently and effectively. By leveraging what we each do best, we’re able to better serve our communities and create more lasting impact, together. Learn more »
About the Author
Clark Collier is CICF’s director of giving strategies, working with individuals, families, and their advisors to structure meaningful and impactful philanthropy. As a Chartered Advisor in Philanthropy (R), Clark provides gift planning support and counsel to the CICF Collaborative and nonprofit organizations throughout the region. He previously served as a philanthropic advisor for CICF and in development roles for both local and global organizations.