What can we learn about non-cash donations from deductions reported - PowerPoint PPT Presentation

Charitable Deductions for Donations of Non-cash Property What can we learn about non-cash donations from deductions reported on individual income tax returns? Gerald Auten Office of Tax Analysis, Treasury Department The views and opinions expressed are those of the author and do not necessarily represent official Treasury positions or policy. September 27, 2012

Some background on the SOI data collection program on non-cash donations. • Collection of data began in 2003. • SOI records information on individual donations reported on Form 8283, including: • taxpayer descriptions of property • values • SOI classifies by types of asset and donee. • Sample: Annual SOI cross-section of about 40,000 returns. • Most taxpayers report non-cash donations only on Schedule A (no details), but most of the dollar amounts are on Form 8283. • Data can be found at irs.gov/TaxStats

Individual Cash, Noncash and Total Charitable Deductions, 1988-2010 250 200 150 100 50 0 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 Source: IRS Statistics of Income Total Cash Noncash

Major Types of Non-cash Donations (billions of dollars) Type & Form 2007 2010 Securities 27.1 16.9 Real estate 8.1 6.1 Clothing 7.6 8.3 Household items 5.1 4.1 Other 4.9 3.5 Form 8283 Total 52.8 38.9 Sch. A only 5.9 5.4 Total 58.7 44.3

Major Types of Charities Receiving Non-Cash Donations (billions of dollars) Type of Donee 2005 2007 2010 Social welfare 11.2 12.3 11.4 Foundations 9.8 14.1 8.7 Donor-advised funds 1.6 3.5 1.8 Education 4.2 8.1 2.9 Health 1.6 1.6 2.7 Religious Org. 4.5 4.2 2.8 Arts and culture 1.3 1.7 1.5 Other 6.8 7.3 7.0 Total 41.1 52.8 38.9

Types of Donated Property Varies by Income, 2007 Real Clothing Total $ Stock Estate and HH Other Amounts AGI Class % % Items % % ($billions) 69 Under $100k 7.5 5 3 24 72 $100-200k 6.1 10 4 14 40 $200-$1m 9.9 29 18 14 62 22 $1m-10m 11.7 2 15 80 $10m + 17.6 6 0 13 Total 52.8 48 15 22 15

The Effects of Policy Change: Vehicles

Another Policy Change: Clothing

Conservation and Facade Easements, 2004-2010

Page 2 of 8283

Only about 3,300 fill out the lower half of Page 1 vs about 100,000 donations of art, real estate, and other items that could potentially involve donations of partial interests.

What we don’t know from the data? • How good are the valuations? • How do the benefits to the charities and their beneficiaries compare to the amounts deducted? • How soon do donations to DAFs reach the charities? – How many accounts seem dormant for long periods? • Less information on corporate donations. • What is happening with easements? Is the decline due to the recession or changes in enforcement? • How might tax reform affect donations? What are the effects of a 2% floor? Conversion to a credit?