Contributions To Veterans’ — 0418 Publ 3386 (PDF)

IRC 170(c)(3) provides an income tax deduction for contributions to a post of war veterans if it is organized in the United States or any of its possessions, and no part of its net earnings inures to the benefit of any private shareholder or individual. This chapter explains when a veterans’ organization may be entitled to receive contributions that are deductible under IRC 170(c)(3).

A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift made on or after January 1, 2007, unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or letter) showing the name of the charity, date of the contribution and amount of the contribution. (Section 1217 of the Pension Protection Act (PPA), which amended IRC Section 170(f).)

Generally, if an organization receives a contribution of charitable deduction property and sells, exchanges or otherwise disposes of the property within three years after the donor contributed the property, the organization must file Form 8282, Donee Information Return.

A war veterans’ organization is one that satisfies both a membership requirement and a purpose requirement. To be eligible to receive tax-deductible contributions under IRC 170(c)(3), at least 90 percent of the members must be war veterans. Substantially all the other members must be veterans, cadets, or spouses, widows, or widowers of war veterans, veterans or cadets. “War veterans” are defined as persons who have served in the United States Armed Forces during the following periods of war:

a. April 21, 1898, through July 4, 1902;

b. April 6, 1917, through November 11, 1918;

c. December 7, 1941, though December 31, 1946;

d. June 27, 1950, through January 31, 1955;

e. February 28, 1961, through May 7, 1975, in the case of a veteran who served in the Republic of

Vietnam during that period;

f. August 5, 1964, through May 7, 1975; and

g. August 2, 1990, and ending on the date prescribed by Presidential Proclamation or by law.

A war veterans’ organization must also be organized and operated primarily for the purposes of:

a. Furthering comradeship among persons who are or have been members of the Armed Forces;

b. Honoring the memory of deceased veterans and members of the Armed Forces and aiding and

comforting their survivors;

c. Encouraging patriotism; and

d. Aiding hospitalized, disabled and needy war veterans and their dependents.

Are all contributions to a 501(c)(19) organization deductible under IRC 170(c)(3)?

No. The requirements for tax exemption under IRC 501(c)(19) are different from the requirements for deductibility of contributions under IRC 170(c)(3).

May contributions to a 501(c)(4) veterans’ organization be deductible?

Yes. If the organization qualifies as a war veterans’ organization within the meaning of IRC 170(c)(3), and satisfies both the membership requirement and the purposes requirement, contributions will be deductible.

May members of a 501(c)(19) or 501(c)(4) veterans’ organization deduct travel expenses if they are incurred in the performance of official duties?

If the organization satisfies the requirements of IRC 170(c)(3) and there is no significant element of personal pleasure, recreation or vacation in the travel, the expenses may be deducted as contributions.

Are auxiliary members included as members for purposes of the 170(c)(3) membership test?

If the auxiliary is a separate organization, its members are not included as members of a war veterans’ post for purposes of the 170(c)(3) membership test. When auxiliary members are not in a separate organization or the auxiliary shares the employer identification number of the post, its members are included as members of the post for purposes of the 170(c)(3) membership test.

Does a 501(c)(19) organization formed primarily to provide social and recreational activities (bar and restaurant for its members) meet the purposes requirement of IRC 170(c)(3)?

No. Social and recreational purposes are not consistent with classification as a war veterans’ organization.

May a taxpayer deduct contributions to an auxiliary described in IRC 501(c)(19)?

If the primary purpose of the auxiliary is to support a post of war veterans described in IRC 170(c)(3) and the auxiliary also meets the membership and purpose requirements of that section, contributions will be deductible.

Are contributions deductible to a veterans’ organization exempt under IRC 501(c)(8) or (10)?

IRC 170(c)(4) also allows a deduction for contributions to exempt fraternal organizations if the gifts are to be used exclusively for religious, charitable, scientific, literary or educational purposes, or for the prevention of cruelty to children or animals.

To receive tax deductible contributions under IRC 170(c)(3), at least 90 percent of the members must be war veterans.