May 01, 2012

No Charitable Deduction for Contributed Services

Question:

A church rents space for its ministry from a generous landlord. Is it able to give its landlord an in-kind contribution statement for a portion of its monthly lease? For example, its monthly lease payment is only $4,000 on a property with a fair market rental rate of $5,000. The landlord wants to contribute $1,000 per month for one year. Could the church give him a charitable contributions statement for $12,000?

Answer:

According to IRS Publication 526, “you cannot deduct the value of your time or services.” Since rent is considered a service, no deduction is permitted.

The members of my Federal Taxation I class at Maranatha Baptist Bible College in Watertown, Wisconsin have taken on the challenge of study and research to answer posted questions. Julia Doerstling of Lantana, Texas contributed to this posting.

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