October 2, 2012
Deductibility of Donations in the Political Season
In the Weekend Wall Street Journal Tax Report, an article entitled, Is Your Political Donation Deductible?, provides a good overview of the various entities involved in the political arena and the deductibility of donations to those entities. The article opens as follows:
It is the height of election season, and campaign spending is setting new records. As in previous cycles, most of the giving has come from individuals.
For those people, tax questions abound. Which donations to political causes and campaigns are tax deductible? Which ones will be disclosed on the Internet — or reported to the IRS — and which will remain secret? Which could trigger a 35% gift tax?
A crazy quilt of federal tax and election laws makes simple answers elusive. "At best the rules are opaque, and at worst they're misleading," says Ellen Aprill, a professor at Loyola Law School in Los Angeles who studies the area. The best approach, say experts, is to know the rudiments of this tricky area in order to identify the most effective donation strategies and avoid a few traps. ...
The bottom line: There are many ways to give politically to candidates and causes, depending on how much you value deductibility, disclosure or avoiding potential tangles with the IRS. Here are more details about common types of political contributions.
The article proceeds to discuss donations to: (i) political campaigns, parties and certain PACs; (ii) super PACs; (iii) social-welfare nonprofits; (iv) other nonprofits such as trade associations; and (v) nonprofit public charities.
(Hat tip: TaxProf Blog)
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