Love Offerings for Former Staff Members

Question:

A church recently eliminated two staff positions. It took a love offering for the staff members in order to provide a severance package which recently expired. However, the church is still receiving checks designated for those individuals. How should it treat these gifts?

Answer:

A love offering is generally an action taken by a corporate body, initiated by the church rather than individuals. A love offering taken on behalf of a employee who has provided services to the church is taxable compensation.

If the more recent designated gifts are still a result of a corporate action by the church, they should be treated as taxable compensation, deductible as charitable contributions by the donors. For example, if the church has communicated that members are encouraged to continue to give to the former staff members through the church, this treatment will apply.

However, if the gifts are simply acts of individuals in the church giving to other individuals, they are neither taxable to the recipient nor tax-deductible by the donor.

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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