Opinion Letter

Letter Number:O-2000-010
Tax Type:Corporate Income Tax; Individual Income Tax
Brief Description:Qualified contributions for the community service contribution credit.
Keywords:
Approval Date:05/03/2000



Body:
Office of Policy & Research


May 3, 2000



XXX
XXX
XXX
XXX



Dear XXX:

Thank you for your letter of March 13, 2000 regarding the contributions made to XXX.

It is my understanding that XXX was designated by the Department of Commerce and Housing as a community service organization for purposes of the community service program and received approval to authorize tax credits to eligible businesses.

In the situation you have presented in your letter, XXX received a donation from XXX in the amount of $XXX. The same day the contribution was made to XXX, XXX purchased a telephone system for $XXX from XXX, making a down payment of $XXX (the same amount as the contribution made by XXX to XXX). XXX paid the balance of $XXX after delivery and installation of the system.

XXX also received a donation from XXX in the amount of $XXX. Again the same day the contribution was made to XXX by XXX, XXX purchased equipment from XXX for $XXX making a down payment of $XXX (the same amount as the contribution made by XXX to XXX). XXX paid the balance of $XXX after delivery and installation of the equipment.

You have specifically asked whether these contributions qualify for the tax credits under the community service program. To make this determination we must first look at the definition of contribution.

K.S.A. 79-32,195(e) provides:

Donation is defined in Black’s Law Dictionary as,

Donatio is defined as,

The definition of gift is as follows:

Without any “consideration” implies that there shall be no motive, price or influence which induces a party to enter into an agreement. In other words, a contribution or gift requires a transfer of ownership of money or property without any expectation of a quid pro quo to be received from the donee. Mertens, Law of Federal Taxation, 31:04. In the documentation you have provided, the money transfers from the donors appear to involve expectations of quid pro quo (an agreement to purchase property from the donor).

The subject transactions shall not be considered a true donation and therefore would not be a qualified contribution for the community service program.

If I may be of further assistance, please contact me at your earliest convenience.

Sincerely,



Kathleen M. Smith, Tax Specialist
Office of Policy and Research


Date Composed: 05/31/2000 Date Modified: 10/10/2001