Situation

Denali Christian College (DCC), a public charity under Internal Revenue Code section 501(c)(3) located in Alaska, has “Bighorns” as their mascot. A major donor wants to give them a stuffed bighorn sheep that he shot on a recent hunting trip and had mounted. The donor has stated that he will donate the bighorn for display in the narthex of DCC’s gymnasium, but is requiring that DCC give him a receipt for the “value” he has placed upon it. He states that the value is an amount equal to one-half of the cost of his hunting trip (he shot two sheep) plus all costs associated with taxidermy and all costs to ship the stuffed bighorn to DCC.

We tell the college that, as a best practice, no value should be included on receipts for non-cash contributions — only a description of the donated property. In addition, the donor’s contribution deduction will be limited to “the cost of preparing, stuffing, and mounting the property.”

Also, DCC will report the value on Form 990, Part VIII, Line 1g and (if non-cash gifts exceed $25,000 for that tax year) on Schedule M, Part I, Line 21.

Rules

From IRS Publication 526, “Charitable Contributions”:

Taxidermy Property 

If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. This applies if you prepared, stuffed, or mounted the property or paid/incurred the cost of preparing, stuffing, or mounting the property.

Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Your basis does not include transportation or travel costs. It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. In addition, it does not include the value of your time.

Taxidermy property means any work of art that:

  • Is the reproduction or preservation of an animal, in whole or in part,
  • Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and
  • Contains a part of the body of the dead animal.

Does your College have a “Gift Acceptance Policy” in place? Do you follow it? More on this in a future edition of TTCHE!

Bottom Line

This may sound trivial, but the rules around receiving, receipting, and accounting for non-cash contributions can be complicated!! Always consult with a tax professional if you are considering activity of this kind. He or she can walk you through the regulations and help you determine the course of action that is most beneficial to your organization — and help ensure you’re complying with the spirit of the law.

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.