Fundraiser proceeds

[Margaret CPA in OH]

Client held fundraiser for daughter's medical expenses.  Employer of daughter donated restaurant profits from that evening and several folks donated auction items.  As nothing was passed through an established tax-exempt charitable organization, I'm pretty sure the income would be construed as gifts and not taxable  and also not deductible by any donor.  Client wants to make donations from this cash to epilepsy groups but that would then be personal contributions from client, as I see it.

Any other opinions out there?  If so, please provide cites for my continuing education...and thanks!

[Lee B]

Hopefully, your client set up a separate checking account in which  to deposit the proceeds,

in order to avoid awkward questions about comingling the money in a n audit situation.

[jklcpa]

Margaret, I agree with your reasoning.  This is how sites like Gofundme generally treat amounts collected, that these amounts are considered gifts for the person's wellbeing, treatments, or whatever the fundraiser is for.  It isn't taxable income.  

[Margaret CPA in OH]

Thanks for replies, friends. Always good to have support or correction as appropriate.

My guess it is too late to set up a separate account but not really sure it would be needed anyway.  Nontaxable income, well publicized as fund raiser and should be easy to trace the payouts for medical expenses and contributions. I will ask about possibility of retroactive accounting. Hey, most of our other clients do that, right?

Happy weekend!

[DANRVAN]

22 hours ago, Margaret CPA in OH said:

I'm pretty sure the income would be construed as gifts and not taxable  and also not deductible by any donor. 

I agree since they were made out of generosity and without full and adequate consideration.  Also not taxable as prizes, awards..

22 hours ago, Margaret CPA in OH said:

  Employer of daughter donated restaurant profits from that evening

When a gift is received from employer there can arise the question of wages or bonus.  But in this situation the money was clearly given out of generosity and not for compensation.