Recording and Acknowledging a Noncash Donation

by Brent Givens
(Indianapolis, IN)

Regarding a noncash contribution: We were blessed to have someone gift our church a building for our church. The building was appraised at $360,000.
We need to do a few things;
1. Show the building as an asset...what is that transaction?
2. Issue a letter to the donor...is there a form that should be attached?

Thank you!

Answer

Regarding acknowledging a noncash donation:

For contributions of property (other than money and publicly traded securities) with a reported value over $5,000, the DONOR must obtain a qualified appraisal and attach an appraisal summary to their income tax return on which the deduction is claimed.

The appraisal summary must be on Form 8283, signed and dated by the church and the appraiser, and attached to the donor’s return on which the deduction is claimed. The signature by the church does not represent agreement in the appraised value of the contributed property.

Remember...it the DONOR’s responsibility to file an IRS Form 8283, if required. Your church is under no responsibility to insure the donor files this form or that is accurately completed.

However, advising donors of their responsibility and providing them with the form along with your non cash contribution statement, it a courtesy most churches provide.

This and more information is covered in my Church Contributions: Handling and Acknowledging Church Contributions ebook.

Regarding recording your asset, I am going to check with a CPA that specializes in nonprofit accounting to ensure that it is recorded properly.

I will post his comment as soon as I receive it.

Hope this helps,

Church Accounting Package

www.freechurchaccounting.com

Comments for Recording and Acknowledging a Noncash Donation

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Oct 24, 2009

CPA's Answer on Donation of Property
by: Vickey

Regarding non-cash donations acknowledging and recording:

Your advice was correct - the donor is responsible for obtaining value, etc.

The church acknowledges and I think has to report IF they dispose of it within a certain time. Check that out. So, if FMV claimed is $200,000 - and the church sells it in 12-18 months for $125,000 the IRS would no doubt review the transaction to assess true value...

I'm not reviewing GAAP, but I believe I would book the gift as:

(Dr) Donated Property (at FMV)
(Cr) Rev - Donated assets

IF, however, the church intends to sell it, they might consider booking it as "Unsold donated property" in the liability section (basically this would reflect it as "Unearned Revenue") of their balance sheet, and actually show the Revenue on the P & L when sold.

Reminder - this is just my opinion. I haven't researched it to determine what the literature says. Please use this for discussion purposes and to point you in the right direction as it is researched. I do believe I could justify the position above from a "conservative" approach.

Vickey's Additional Reply

Thanks Greg!

Brent,

If property received as a charitable contribution requiring an appraisal summary on Form 8283 is sold, exchanged, or otherwise disposed of by the church within three years after the date of its contribution, the church must file Form 8282 with the IRS within 125 days of the disposition.

Important Note: This form provides detailed information on the contribution and the disposal of the property. A copy of this Form 8282 must be provided to the donor and retained by the church.

A church that receives a charitable contribution valued at more than $5,000 from a corporation generally does not have to complete Form 8283.

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