Givers may deduct contributions of cash or property, but only to the extent they received no personal benefit from the donation. Often, the IRS attributes at least some (if not total) personal benefit to amounts expended for items like dinner tickets, church school tuition, YMCA dues, raffles, etc. To determine contribution amount, subtract the FMV of the “personal benefit” item from the cost and deduct the remainder. Most charities now allocate the deductible, nondeductible portions.

Urbauer, TC Memo 1992-170 discusses the issue of whether an unused benefit ticket can produce a contribution. The Urbauers had purchased tickets to their daughter’s school music recital. They did not attend and then claimed the entire expense as a contribution. The Tax Court indicated their failure to attend does NOT increase their contribution. Acceptance of the ticket “creates an expectation that taxpayer will attend and assert the right to be seated.” The school is then obligated to prepare for this attendance. The Court said: “Taxpayer receives a material benefit merely by having the right to decide whether or not to attend.”

Taxpayers often want to take deductions for amounts paid for benefit football games, youth-group car washes, parish pancake breakfasts, school plays, etc. The taxpayers have no intention of attending these events but incur the expense as a direct contribution to the institution. Extending the logic of the Urbauer case to some of these expenses may mean that the IRS would not allow them. On the other hand, if the taxpayer returns the ticket to the organization for resale and does not receive a refund of the cost of the ticket, the entire amount paid for the ticket is deductible. (Rev. Rul. 67246, distinguished by Rev. Rul. 74-348)

Moral of this story is to take the cash rebates and then contribute the funds to the favorite charity with a bank record as verification or obtain the appropriate written documentation from the donee organization.