A non-cash gift is any contribution made to MLS which is not made in cash or by check. Examples of a non-cash gift are:
- Computer, office equipment or supplies
- Literature and books
- Tools and/or building supplies
It is important when you consider making a non-cash gift that you are understand that for legal and tax reasons, all gifts to Mt. Lou San are under the control of our Board and subject to our policies and discretions. However, MLS honors the designations of our partners when you carefully identify the purpose. We will see your gift is properly applied, and your receipt will include this information.
Gifts of equipment or other goods used for personal and not ministry purposes are considered personal gifts. To be deductible, a non-cash gift must be an item which could be purchased with ministry funds and the use of it is controlled by ministry policies.
Some non-cash gifts are not deductible for other reasons. The IRS rules regarding non-cash gifts can be complex and confusing. Be sure to contact the IRS if you still have a question regarding the rules for a non-cash gift you are considering.
Professional services can be provided by, but are not limited to a doctor, dentist, lawyer, mechanic or carpenter. We appreciate the generosity of those who provide such services, but tax rules do not permit a deduction for the professional’s normal service fee or charge. Only out-of-pocket costs related to providing the services may be deducted. For example, a mechanic may change the oil in a missionary’s automobile. The mechanic’s fee for such a service is not deductible, but the oil, oil filter, or other materials placed in the automobile are deductible.
Reduced-Price Merchandise or Property
You may charge a missionary reduced prices for merchandise or materials. The “bargain-sale method” is used to determine the value of such a gift. Subtract the difference between the fair market price and the sale price. You are permitted to report the difference as your gift amount. Special rules apply if you are a dealer in the bargain sale property. Keep accurate financial records from the vendor from which you purchased the materials and keep a copy of the writing that acknowledges the “actual” sale price paid by the missionary. Although MLS will issue a letter acknowledging the transaction, that letter will only acknowledge the price paid by the staff member and not evidence the amount of your gift.
Rent-Free or Reduced Housing
You may not deduct reduced rent or rent-free housing you provide to an individual or family. However, you may deduct out-of-pocket expenses for the property you are renting. For example, you may deduct lawn care, snow removal, property taxes, gas or heating costs, repair costs, etc. Remember to keep accurate financial records substantiating your out-of-pocket expenses. If you are unsure about the validity of your deduction, check with your accountant or tax advisor. MLS is grateful when our missionary family receives such kind and gracious support, but we cannot give a receipt evidencing your gift.
MLS cannot issue an official cash receipt or declare a value for any contributed property or materials. In accordance with IRS regulations MLS will provide a “gift-in-kind” letter used to acknowledge receipt of your gift. However, the IRS rules require that you provide adequate substantiation for the value of your gift. In some cases a written appraisal from a person or entity with expertise in calculating the value of such property may be requested.
How do I obtain a gift-in-kind letter of donation?
In order for MLS to supply you with a gift-in-kind letter or letter of donation, you will need to provide, in writing, the following information to Art Trawick:
1. Your name and address
2. Description of donated property: Be specific. Provide the age/year, mileage, model, vehicle ID number or serial number and other special identifying information. Include the condition of the contributed property when appropriate.
3. Date you delivered the property to the staff member or MLS.
4. Name of missionary and/or purpose for which the property will be used in the missionary’s ministry.
5. If you provide an estimated value, MLS cannot list the value in its letter.
What other types of non-cash items can I give to Mt. Lou San?
Stocks, bonds, and securities can be contributed to MLS.
Before you make your contribution, please seek assistance from MLS. It can be costly if you proceed without wise counsel and planning. It is important that you plan prudently so that you can take full advantage of the tax incentives allowed by the IRS.
For example, you can contribute stocks to MLS, but you should investigate the best procedure to use. Normally it would be best for you to send the unendorsed security in its own individual envelope. In a second envelope, you should also send a signed stock power (a stock power can be secured at your local brokerage firm or securities office). If you sold the stock in your name and donated the proceeds to MLS, you would be required to pay taxes on the recognized income. If you give the unendorsed security with a signed stock power, you would not be responsible for the taxes and the full value of the stock would be a deduction.
Contact our Financial Department to discuss any gift you would like to contribute to MLS. Our staff is always excited to hear the unusual, creative, and innovative ways God uses to help provide financial needs for our missionaries.
We wish to learn how we can better serve as your partner in serving others with MLS.