Are Nonprofit Raffle Ticket Donations Tax Deductible?

By Wilmot Proviso

For the purpose of determining your personal federal income tax, the cost of a raffle ticket is not deductible as a charitable contribution. It may be deductible as a gambling loss, but only up to the amount of any gambling winnings from that tax year. If you donate property to be used as the raffle prize itself, its value may be deductible as a charitable contribution.

For the purpose of determining your personal federal income tax, the cost of a raffle ticket is not deductible as a charitable contribution. It may be deductible as a gambling loss, but only up to the amount of any gambling winnings from that tax year. If you donate property to be used as the raffle prize itself, its value may be deductible as a charitable contribution.

Charitable Deduction

The cost of a raffle ticket is not deductible as a charitable contribution, even if the ticket is sold by a nonprofit organization. The IRS considers a raffle ticket to be a contribution from which you benefit. If you receive a benefit from making a donation, you can only deduct the amount of your donation that is greater than the value of the benefit you receive. The IRS explicitly prohibits deducting the cost of raffle tickets as a charitable contribution, presumably because it does not consider the cost of the ticket to be greater than its benefit.

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Gambling Loss Deduction

If you lose the raffle, the cost of your ticket might be deductible as a gambling loss. A gambling loss deduction is allowed only if you itemize deductions and only if you have gambling winnings from that tax year. Gambling losses are only deductible up to the amount of gambling winnings. Gambling winnings must be reported on IRS Form 1040, and losses may be reported on Schedule A.

Recordkeeping Rules

The IRS requires you to keep detailed records in order to claim the gambling loss deduction. You must keep a diary that includes the date and type of each wager, name and address of location where you gambled, names of other persons present with you at the gambling establishment, and amounts you won or lost. You must also have other documentation to prove your winnings and losses, such as ticket stubs or payment slips.

Donation of Raffle Prize

If you donate property to be used as the raffle prize itself, the general rule is that you can deduct its fair market value as a charitable contribution. There are a great many detailed exceptions and qualifications to this general rule, however. Refer to IRS Publication 526 for a full description of the rules regarding contributions of property. Charitable deductions are only allowed if you itemize deductions and only donations made to qualified organizations are deductible. You can search the IRS website to determine whether a nonprofit is qualified.

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State Statute of Florida on Raffles & Charities

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Legal Issues of Online Raffles for Nonprofit Fundraising

A raffle is a method of distributing prizes among people who have paid for a chance to win a prize, generally determined by drawing tickets. A raffle is considered a form of lottery or gambling by the Internal Revenue Service. As a result, there are a number of restrictions and reporting requirements on all raffles. An online raffle brings additional obstacles for nonprofit organizations, particularly because online gambling is illegal in many states. As a result, using an online raffle for fundraising must be approached carefully.

Non-Profit Requirements for Non-Cash Donations

Encouraging donations is an important part of ensuring the success of a non-profit organization. In order to avoid penalties from the Internal Revenue Service and maintain exempt status, IRS requirements must be met and can vary based on the type of gift and its value. These requirements may include a written acknowledgement from the non-profit and an appraisal of the item. In addition, special rules apply if goods or services were received from the nonprofit in exchange for the donation or if the donee gifts automobiles, planes or boats.

The Basis for Donating Inherited Property

Donating inherited property helps the charitable organization to which the donation is made, but it also helps the donor by creating a potentially substantial charitable contribution tax deduction. The extent of the available tax deduction to the donor depends in part on the donor's basis in the property, which is the value of the property for taxation purposes at the time that the property is inherited.

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