Legal Question in Tax Law in Delaware

gifts to pastors

is a $10000 gift given through the church to a pastor taxable?

Asked on 9/22/08, 2:43 pm

1 Answer from Attorneys

Ronald Cappuccio Ronald J. Cappuccio, J.D., LL.M.(Tax)

Re: gifts to pastors

I presume your idea is to make a gift to the church which would be deductible. Then, the church would make a "gift" to the pastor which would not be taxable. I do not believe this scenario will work.

First, the IRS views this as a "step transaction." This means the IRS compresses the steps to look at the substance (you giving $10k to the pastor.) A direct gift would not be taxable to you or the pastor but would not be deductible.

You should work this out with the church's tax attorney to review the specific circumstances and devise the best tax advantaged plan.

I hope this helps!

Ron Cappuccio

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Answered on 9/22/08, 9:52 pm

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