 | Larry Sell
is a partner of Regier Carr & Monroe, L.L.P., a regional accounting firm with offices in Wichita, Tulsa and Tucson. The firm was founded in Wichita in 1948 and Larry joined the firm in 1976. He is currently the partner in charge of the Wichita office and serves clients in the tax consulting and small business consulting areas.
Larry graduated from Wichita State University in 1974 and currently lives in the Andover area with his wife Michelle and daughter Angelica.
Larry can be reached at Regier Carr & Monroe, L.L.P., Suite 100, 300 West Douglas, Wichita, Kansas 67202, by phone at (316) 264-2335 or (800) 798-2305, by fax at (316) 264-1489 or by e-mail at larry.sell@rcmcpa.com. The firm also has a web site at www.rcmllp.com that offers helpful information. |
Taxes & Accounting
2003-11-01 08:49:00
Charitable Giving
ANSWER: I think it is important to distinguish business entities that pay income tax from business entities that are pass through forms of business, such as partnerships, sole proprietors and Subchapter S corporations. These pass through business entities will report payments made to charities as a separate item for the individual owners to report on their individual income tax returns. So there is generally no distinction between payments made by these types of business and a personal contribution. However, Kansas does have a program that provides for business entitles to qualify for a Kansas income tax 'credit' for payments made to certain pre-qualified charitable organizations.QUESTION: If the business is operated within a taxable corporate entity (a 'C' corporation), what are the rules for deductibility?ANSWER: The deduction of a corporation for a contribution to a qualifying organization is generally limited to 10% of its taxable income before the contribution deduction. Contributions are valued at fair market value with several exceptions. Ordinary income property (property that if sold would generate ordinary income to the corporation) is limited to the tax basis of the property. There are of course exceptions to this exception. These exceptions are very specific and need to be reviewed with a qualified advisor, but they relate to inventory type property, scientific research property and computer equipment. Other types of contributions generally follow the rules for individuals.QUESTION: What are the individual rules?ANSWER: Charitable contribution deductions are itemized deductions. As such, an individual will only receive income tax benefit if they itemize their deductions. The Kansas tax credit program is an exception. Deductions of contributions of cash are limited to 50% of an individual's contribution base, which is normally their adjusted gross income. These payments must be made to a qualifying charity. These charities normally fall within the following tax exempt groups: 1-churches, 2-educational institutions, 3-hospitals or medical research organizations, 4-endowment foundations, 5-governmental units if payments made for exclusively public purposes, 6-organizations receiving substantial support from the public or a governmental unit, 7-private operating foundations, 8-private non operating foundations, 9-private foundations that pool contributions into a common fund. Additionally, the contribution is only deductible if made to or for the use of: 1-The United States, a state or local government for exclusively public purposes, 2-A corporation, trust, fund or foundation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals, no part of the net earnings of which inure to the benefit of any individual, 3-a few other specific types of organizations.
