A donor purchased $300 worth of raffle tickets and now wants a letter for a tax deduction. What do we do?
The purchase of a lottery ticket from a charity is not deductible as a charitable contribution for federal income tax purposes. The IRS has ruled that the tickets are worth the chance to win the prize and there is no element of gift in the purchase. Therefore, you may want to thank the purchaser for the payment, but indicate that it was for lottery tickets and was not deductible.
The more devilish question is whether the lottery is legal? In most states, there are only limited exceptions to the basic rule that gambling is illegal unless run or licensed by the state. A lot of charities openly sponsor gambling that is not in compliance with the limitations. Fortunately for the charities, these rules appear to be among the least enforced rules in the world (as long as the charity is deemed legitimate).
We received an invitation very recently to a charitable “Casino Night” in honor of a prominent state legislator that appears to be in violation of our state law, but is not at all unusual. A couple of years ago, we advised a client that the charity’s lottery was illegal and were told they weren’t worried. They said their best ticket salesman was an Assistant District Attorney in the office that would be responsible for any prosecution.
Planned giving sounds complicated, with its CRUTs and CRATs, CLUTs and CLATS, and CGAs. It can be incredibly complicated, but it needn’t be. Keeping it simple may be the best way to start a planned giving program for a charity that hasn’t already put one in place.
This webinar offered a review of major planned giving instruments and a discussion of ones that make the most sense to emphasize in starting a planned giving program. It discussed the advantages of integrating planned giving into an existing development program, targeting the best prospects, getting buy-in from the board that is likely to generate results, and setting a structure to make it all happen.
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