Is the cost of a members' magazine tax-deductible?
Summary:
Answering the question is complicated. Here is some guidance.
Answer:
Is a magazine that provides program listings of a PBS station for its
members (stated contribution of $25) a deductible item for the donor?
For larger donations, is the deductible amount ($donation minus $25?)
Or is this dues to a membership organization and therefore tax
deductible?
John Taylor replied:
Actually, "dues" are NOT tax deductible so let's hope these are not.
(Let me expand on what John Taylor is saying here. If you belong to a golf or billiards club and it charges you $100 per year as "dues," that payment is not tax-deductible. If you send a donation to a "charitable, scientific, educational or literary organization" -- familiar "501(c)(3)" organizations" -- and they tell you that you have become a "member" as a result, the contribution probably is tax-deductible.
Since the "contribution" is under the $75 threshold you are not required
to send your donor a quid pro quo receipt. By not saying anything, then,
you are leaving up to the contributor to decide if they can/should claim
a deduction. If, though, you want to play completely by the rules you
would want to reduce the $25 gift by the FMV of magazine and show the
net as being a gift.
I am assuming that [the magazine] is something that non-donors can
purchase and has a newsstand price and that the charge is less than $25.
If not, though, it fits into the same category as the previously
discussed coupon book: By stipulating that you must give a minimum of
$25 to receive the magazine you have, in essence, established the FMV at
$25.
With the exception of not sending a receipt at all there are three ways
receipt of the magazine would not constitute a benefit that should be
subtracted from the gift:
1) The magazine is given, freely, to donors and non-donors alike. 2) The
FMV of the magazine is no more than 2% of the gift amount or $64,
whichever is less (for 1994). 3) The magazine meets the IRS' definition
of "token item." This requires that the cost of the magazine be less
then $6.40 (again, 1994 figure), but the IRS usually thinks of things
like key-chains or lapel pins in this regard.
[Our university] has a similar situation in regard to our Alumni
Association. All contributors of $35 receive _The [University]
Magazine_. In our case this is not regarded as a gift-related benefit as
the same publication is made available to alum and friends alike at no
charge. We encourage folk to give us $10 to defray costs, but it's not
required.
