Legal & Tax Implications - Essay Example

Your organizations expenses for the event total ,000. Artists, galleries, and individuals donate art to be auctioned at the event. Purchasers of tickets to the event, donors of art, and purchasers of the art at the auction have asked for receipts to substantiate their gifts (for income tax deduction purposes) to your organization. How do you respond? With regards to gifts of art, the law states that “gifts of art and other tangible personal property are not deductible if there are "intervening interests.

" For example, if a person gives a painting to a museum but does not actually deliver the painting and retains it in her home, then the gift is not complete until the actual delivery to the museum occurs. At that time, the gift is deductible. Sec. 170(a)(3). The obvious purpose of the rule is to allow the deduction only when the charity actually has ownership and control of the art or other personal property.” (Crescendo Interactive, Inc. 2009) Therefore, the purchasers of tickets to the event, donors of art, and purchasers of the art at the auction who have asked for receipts to substantiate their gifts can only do so when their respective art pieces have actually been sold and the proceeds have been remitted to the charitable organization holding the fundraising event.

Case Study 2: P.J. Morgan started a bank in 1947. Morgans bank merged with Mega Bank Corporation (a publicly traded company) in 2000. Morgan now owns 1 million shares of Mega Bank Corporation. The share price is currently 0 per share and Morgans cost basis in the stock is .01 per share. Morgan has pledged ,000 to your organization and he plans to write a check for that amount before the end of the tax year. What might be another option Morgan should consider? What are the tax implications? According to Eisenhower Medical Center Foundation (EMCF), the basic rule is that “The basic rule is that a gift to a charity is deductible when the property or cash is delivered