Charity Raffle Costs

Today TaxMama® hears from Eliezer in the TaxQuips Forum with this interesting question. “Many non-profit organizations run raffles with great prizes. Sometimes the raffle tickets can get pricey (>$100) and the entrants want to deduct these amounts as charitable contributions to the non-profit organization. Assuming the entrant did not have any winnings, is there any situation in which these are a valid deduction? Does it matter if there is “no purchase required”? Or that the raffle has a limited (or unlimited) number of tickets sold? Or if it is called a sweepstakes rather than a raffle?  Would love to help taxpayers find a legit way.”

                          

Dear Eliezer,

Let’s see.

When you pay $100 for a raffle ticket, how is that different from paying $100 for lottery tickets?

You have an opportunity to win a prize.
You can deduct the lottery costs up to the amount of your winnings.
Otherwise, no deduction.

So….the only way I can see the cost of those tickets as a deduction, is to have the buyer donate the tickets back to charity – at the time of purchase (not after having lost).

Let’s use this as today’s TaxQuip and see if anyone else has any ideas.

And remember, you can find answers to all kinds of questions about charitable contributions and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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