September 12, 2014

Donating a Timeshare Vacation to a Pastor

Question:

A member of our congregation owns a timeshare at a resort. He would like to donate a two week stay at the timeshare to our pastor. This situation leads me to ask the following questions: 

1)    The donor is requesting a deductible contribution letter. Is it appropriate for us to give him one?
2)    Is this situation taxable to our pastor?

Answer:

1)    There is little difference between this situation and donating one’s services. Remember, there is no deduction for donating one’s services. Similar to donating one’s services, the tax benefit of what this donor is contemplating is limited to the following:
  • He does not have to report income that he does not receive since he will collect no rent from the pastor.
  • However, we believe it is appropriate to provide a letter thanking the member for making his timeshare available. The letter should not be prepared on church letterhead; instead, it should be prepared and sent from the pastor himself.
  • Further, this is not an action taken by the pastor’s employer (it is not a corporate action taken by the church). A reminder of what is meant by “corporate action” and how it affects the deductibility of donations may be read at the following three blog posts that were published in the past:
2)    This situation is not taxable to the pastor. The pastor provided no services to the congregation (his employer) for which he is receiving this favor.

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