QCD and gifts from the charity

Submitted by Joseph Schmidt on Tue, 2019-07-09 16:59

I have seen multiple places on the WWW that even a token gift disqualifies QCD. I can’t locate any reference to this on any IRS site. Can someone point me to a publication that states that a token gift disqualifies QCD?

When the gift is more than a token amount, does that disqualify the entire QCD or just the amount of the gift?

I.E I transfer $10,000 to a qualified Endowment and receive a $2,000 tax credit. Does this disqualify the QCD or is the QCD amount $8,000.

Again, It would be nice to see an IRS answer.



Submitted by Alan - IRA critic on Tue, 2019-07-09 17:25

  • The following is Tax code section 408(d)(8)(C), which indicates that the QCD must be fully deductible under Sec 107. That means if you had your custodian cut a check for 10,000 to a charity and you get a benefit of 2,000 from the charity, you end up with no QCD, a taxable distribution of 10,000 (assuming no IRA basis), and an itemized deduction for 8000 subject to the Sec 170 limitations.
  • (C) Contributions must be otherwise deductibleFor purposes of this paragraph, a distribution to an organization described in subparagraph (B)(i) shall be treated as a qualified charitable distribution only if a deduction for the entire distribution would be allowable under section 170 (determined without regard to subsection (b) thereof and this paragraph).

Submitted by Joseph Schmidt on Tue, 2019-07-09 19:23

Thanks for the explanation for the tax credit. That deal seemed too good to be true. What I was missing was the word “entire”.

For the example of giving $10,000 and receiving an unsolicited token gift such as a coffee mug, the $10,000 would qualify for QCD.

It is my understanding that the charity is responsible for telling the donor if the gift the donor receives has a value that must be deducted.

If the charity gave a gift with a value of $100, the charity should document the $100 and the donor should return the gift to the charity to protect the use of QCD.

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