Gifts/Charitable Contributions

[nohope]

Number 7 ) gifts of the Statement of Financial Affairs asks for charitable contributions in excess of $100. What happens if the amounts are larger?

[debee]

Under ordinary circumstances (you didn't just give 50K to a new charity that your Uncle Bob happens to chair), it won't be a problem. You may get a few questions, but nothing scary.

You might be required to show that you have a history of giving, especially if you are claiming a charitable expense on either the Means Test or Schedule J. But you are allowed to continue giving. Congress passed The Religious Liberty and Charitable Donation Clarification Act of 2006 which allows debtors to give up to 15% of their income. It's a federally protected right, even in bankruptcy.

[ScaredINMich]

On our records we just had to list that we tithe about $400 a month to church. Needed to list the name and address for who received the donation.
The smaller months donations we didn't specify.

[tobee43]

Under ordinary circumstances (you didn't just give 50K to a new charity that your Uncle Bob happens to chair), it won't be a problem. You may get a few questions, but nothing scary.

You might be required to show that you have a history of giving, especially if you are claiming a charitable expense on either the Means Test or Schedule J. But you are allowed to continue giving. Congress passed The Religious Liberty and Charitable Donation Clarification Act of 2006 which allows debtors to give up to 15% of their income. It's a federally protected right, even in bankruptcy.

we had given extremely large donations the year we filed bk...actually one was over 20k and one was 10k...lucky for us one was to the State of New Jersey and the other one was for the County we lived in. Both the state and the county gave us ample proofs which were submitted along with our petition. since we had surrendered our house we gave away a ton of things to legitimate agencies and charities since we could not take the items with us.

we did not rec'd a ONE question from the trustee about the large donations.

[Pandora]

It really depends on the trustee.... standard 15% usually isnt questioned, but on the flip side of that...some trustee's DO question and want proof of any tithing at all. Large amounts usually get claimed on tax returns, so be prepared to be able to prove you pay in what you say you do...be it through tax returns or church records.

[tobee43]

It really depends on the trustee.... standard 15% usually isnt questioned, but on the flip side of that...some trustee's DO question and want proof of any tithing at all. Large amounts usually get claimed on tax returns, so be prepared to be able to prove you pay in what you say you do...be it through tax returns or church records.

exactly, we attached our receipts since the contributions were so high right to the petition. just so the trustee knew exactly what they were and why. and i think it helped that the receipts came from the State of New Jersey and a county admin office. but the good point pandora makes, is be prepared!!

[nohope]

Donating goods to Goodwill is not the same as tithing to one's religious organization.

tobee43 do you think if you gave those contributions to someone other than the State of NJ it would have been questioned? $30K is a large contribution.

[debee]

It goes to issues of faith/fraud as well & can raise questions as to whether the debtor was acting to hinder, delay or defraud creditors. There are people who will get the charitable spirit on the eve of filing bankruptcy because they rather give their money to a "cause" than their creditors. (Not you, OP)

The trustee can avoid as fraudulent any transfer that exceeds 15% of the debtor's gross income in the year it was made unless the debtor can establish that they have a longstanding history of giving that amount.

It's in 11 USC 548, here: http://www.law.cornell.edu/uscode/us...8----000-.html

[nohope]

Well my lawyer indicated that I didn't make any charitable contributions when I did....

[debee]

The longer I hang out at this site, the less surprised I am by odd attorney behavior.

Filers don't have to list amounts less than $100 per recipient for charitable contributions, but anything above that is required on the Statement of Financial Affairs, Question #7. The question specifies that debtor should provide the name, address, relationship to debtor, date, description and value of gift (which includes both cash and non-cash items).

[tobee43]

we tithe every year at least 10% of our income...and when we didn't have money we did absolutely use the goodwill or vets and get receipts from them as well. now, our religious contributions really don't have the same point for us as our tithing beliefs. we just believe we should tithe no matter what it's just our spiritual belief.

no, i actually believe as long as one as a receipt from a legitimate source, one may be questioned, but if you have the proofs , although as you point out coming from the State or County one would likely think more crediable...i suppose.
.

also as debee points out,

The trustee can avoid as fraudulent any transfer that exceeds 15% of the debtor's gross income in the year it was made unless the debtor can establish that they have a longstanding history of giving that amount.

we had 40 years of income taxes tithing the same percentage and could show that as a "regular" contribution practice.

but honestly, nohope, i'm sure they may have or could question anyone as pandora points out, it could really also depend on the trustee.

[nohope]

just wondering - is transferring property the same as making charitable contributions?

[debee]

Transferring property just means giving it to someone else. Your mortgage payment is a transfer. It's just not a voidable one.


Are you worried about something?

[ValleYum]

What on earth did you donate to Goodwill?? LOL I imagine you could transfer a car title, etc. to a charity - how the Trustee would view that... I wouldn't begin to have a clue.

[btbeme]

just wondering - is transferring property the same as making charitable contributions?

If the property is an object, and that object's value or existence would otherwise become something worth the Trustee's attention (especially if it would fall outside of your exemptions), I'd think twice before doing it. Now that being said, there is a difference between donating your used clothes and donating your used jetski just before filing. All transfers within 2 years have to be listed, so the Biggest Rule Of Them All will apply - does that transfer pass the smell test? A history of property transfers can help your argument, but a long and legitimate list of transfers with even a mid-sized cumulative value might draw a lot of extra scrutiny. Not that you would lose, just that you would have some 'splaining to do.