Page 4

contribution. See Contributions of Property, later. Your deduction for charitable contributions generally can't be more than 60% of your adjus- ted gross income (AGI), but in some cases 20%, 30%, or 50% limits may apply. The 60% limit is suspended for certain cash contributions. See Qualified cash contributions for 2020 and Qualified contributions for relief efforts for 2018 and 2019 disasters, later. Table 1 gives examples of contributions you can and can't deduct. Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you re- ceive. Also see Contributions From Which You Benefit under Contributions You Can't Deduct, later. If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Example 1. You pay $65 for a ticket to a dinner dance at a church. Your entire $65 pay- ment goes to the church. The ticket to the din- ner dance has a fair market value of $25. When you buy your ticket, you know its value is less than your payment. To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). You can deduct $40 as a chari- table contribution to the church. Example 2. At a fundraising auction con- ducted by a charity, you pay $600 for a week's stay at a beach house. The amount you pay is no more than the fair rental value. You haven't made a deductible charitable contribution. Charity benefit events. If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you re- ceive. If there is an established charge for the event, that charge is the value of your benefit. If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Whether you use the tickets or other privileges has no effect on the amount you can deduct. However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. TIP Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this doesn't mean you can deduct the entire amount. If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribu- tion amount. Example. You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Printed on the ticket is “Contribu- tion—$40.” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). State or local tax credit. If you make a pay- ment or transfer property to or for the use of a qualified organization and receive or expect to receive a state or local tax credit in return, then the amount treated as a charitable contribution deduction is reduced by the amount of the state or local tax credit you receive or expect to re- ceive in consideration for your payment or transfer, but an exception may apply. If an ex- ception doesn’t apply, you must reduce your charitable contribution deduction even if you can’t claim the state tax credit in the year. Exception. If the state or local tax credit you receive or expect to receive doesn’t exceed 15% of your payment amount or 15% of the fair market value of the transferred property, then your charitable contribution deduction isn’t re- duced. Example 1. You make a cash contribution of $1,000 to charity X, a qualified organization. In return for your payment you receive or expect to receive a state tax credit of 70% of your $1,000 contribution. The amount of your chari- table contribution to charity X is reduced by $700 (70% of $1,000). The result is your chari- table contribution deduction to charity X can’t exceed $300 ($1,000 donation - $700 state tax credit). The reduction applies even if you can’t claim the state tax credit for that year. Your de- ductible charitable contribution to charity X is $300. Your total contributions may still be sub- ject to limitations. See Limits on Deductions, later. Example 2. You donate a painting to char- ity Y, a qualified organization. At the time of the donation, the painting has a fair market value of $100,000. In return for the painting, you receive or expect to receive a state tax credit of 10% of the fair market value of the painting. The state tax credit is $10,000 (10% of $100,000). The amount of your state tax credit does not exceed 15% of the fair market value of the painting. As a result, your charitable contribution deduction to charity Y is not reduced. Your deductible charitable contribution for your noncash contri- bution to charity Y is $100,000. However, your total contributions may still be subject to limita- tions. See Limits on Deductions, later. State or local tax deduction. If you make a payment or transfer property to a qualified or- ganization and receive or expect to receive a state or local tax deduction in return, then the amount of your charitable contribution deduc- tion to the organization may be reduced in some circumstances. If the amount of the state CAUTION ! or local tax deduction exceeds the amount of your cash contribution or the fair market value of the transferred property, then your charitable contribution deduction is reduced. However, if the amount of the state or local tax deduction doesn’t exceed the amount of your payment or the fair market value of the transferred property, then no reduction is necessary. Example 1. You make a cash contribution of $1,000 to charity Z, a qualified organization. Under state law, you are entitled to receive a state tax deduction of $1,000 in return for your payment. The amount of your charitable contri- bution deduction to charity Z isn’t reduced. Your charitable contribution deduction to charity Z is $1,000. However, your total contributions may still be subject to limitations. See Limits on De- ductions, later. Membership fees or dues. You may be able to deduct membership fees or dues you pay to a qualified organization. However, you can de- duct only the amount that is more than the value of the benefits you receive. You can't deduct dues, fees, or assess- ments paid to country clubs and other social or- ganizations. They aren't qualified organizations. Certain membership benefits can be dis- regarded. Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. 1. Any rights or privileges that you can use frequently while you are a member, such as: a. Free or discounted admission to the organization's facilities or events, b. Free or discounted parking, c. Preferred access to goods or serv- ices, and d. Discounts on the purchase of goods and services. But, item (1) doesn’t include rights to purchase tickets for seating at an athletic event in an athletic stadium of a college or university as a result of a contribution to such institution. 2. Admission, while you are a member, to events open only to members of the or- ganization if the organization reasonably projects that the cost per person (exclud- ing any allocated overhead) isn't more than $11.20. Token items. You don't have to reduce your contribution by the value of any benefit you re- ceive if both of the following are true. 1. You receive only a small item or other ben- efit of token value. 2. The qualified organization correctly deter- mines that the value of the item or benefit you received isn't substantial and informs you that you can deduct your payment in full. Page 4 Publication 526 (2020)