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.
Charity fundraising event planners have to worry not only about the invitation list, the menu and the program. They also have to worry about a host of legal issues that, if ignored, could turn the event into a financial and public relations disaster. This webinar will explore the top ten areas of legal concern for a charity’s annual gala dinner dance, bikathon, day in the park, or other special fundraising event. Learn more in our pre-recorded webinar.
Weekly question and answer
Notice of each full edition
and its free stories
Report on 501(c)(3) electioneering
What our readers say about Nonprofit Issues
Once again you've tackled a tricky question and explained it so we all can understand the issue.--M.V.
Thank you for your informative and keen advice on nonprofit matters. I believe it's a unique and concise place to get answers to this often wispy area called nonprofit. --R.T.
Have a question?
Other ways to
Talk to the Editor
Next Conference Call:
Thursday, July 24, 2014
Participate in this bi-monthly telephone seminar conference call and ask your questions directly to Editor Don Kramer.
Access the entire site
($9.95/24 hours, $17.95/3 months).
Full Day Program
A well-received full-day program that covers the current hottest topics in nonprofit law. Qualifies in Pennsylvania for Continuing Education credits.
Don is available for programs and speaking engagements ranging from a one-hour presentation to a full-day primer on nonprofit law. Contact us if you are interested in having him speak at your program.