Free Essay: Tax Research Memorandum

TO: ELIZABETH COLLINS

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FROM: TAX ACCOUNTANT, CPA

DATE: MAY 25, 2015

RE: TAX TREATMENT OF TICKETS PAYMENTS

FACTS

You have always been buying your tickets from ticket scalpers. You joined this year university ticket program that requires you to pay $2,000 contribution to the university for the right to purchase a ticket. After the payment of $2000, it enabled you to pay $ 400 per season ticket. The price paid for a season ticket is not tax deductible. However, the contribution to the university is typically deductible.

ISSUE

The issue here is (1) whether Elizabeth should be tax when paying to the school to join the charitable organization issue (2) whether the Elizabeth should be tax for season ticket that was paid through the University

RULE

The gives certain tax relief to the charity organizations so that they don't pay tax. Some factors are put in to avoid tax evasion by individual opting to pretend to be a charity organization. The definition of the charity organization in the context of taxation mostly lies on whether the donor, in this case, is going to benefit from the donation. The tax law goes on and mentions that if through donation the individual is going to take advantage in any way may in terms of asset capital or a service then that kind of contribution is taxable. The law also gives absolute ceilings on the amount of money. In case of the purchase of the basket ticket as charity organization the law finds out that Elizabeth is subject to all applicable tax on the $ 2000 that she pays to join the right ticket community. The client here is going to experience an element of benefit. It quite clear that Elizabeth is not donating but paying so that he can sit in the university stadium. That is taxable

ANALYSIS

It has been well been established that that most charity contributions are not a supposed to b be taxed as stated by the 26 U.S. Code 170.The fact that 26 U.S. Code 170 identify and broadly mention the charitable organization. It is imperative to observe that charitable organizations are taxable to some extent. 26 U.S. Code 170 a (1) Charitable contribution shall be allowed as a deduction (as stated in subsection (c) of which payment is within the taxable year. This deduction will be permitted in the cases where it would be under the rules that would be provided by the secretary. That means charitable organization payment in most cases will be tax deductible depending upon the determination by the law. Everyone should understand the purpose of any charity group. The purpose according to taxation is restricted. It was not opened here enough to avoid efforts of tax evasion. A very broad definition pound has led to massive tax loss. Initially, the ticket bought by Elizabeth was taxable as stated under the following laws of taxation.The fact that the law for taxation states that any recreational event that is for is subject to tax to an absolute value. The fact shows that Elizabeth was paying tax while watching this basketball matches. By joining the charitable organization to benefit for the season ticket, Elizabeth makes a total contribution of $2000 .then he will have to pay another $400 for the season tickets.Concerning the basketball tickets here is what the law on taxation says 26 U.S. Code 170 (l) (1) this talks about treatment of money paid to the benefit of the institution of higher learning. It states that 80% of the money paid as described in paragraph (2) shall be as a charitable contribution. The amount that paragraph(2)mentions are the following amounts (A)The amount if paid for benefit of education by the taxpayer for the benefit of educational organization(I), which is supposed to be detailed in subsection (b )(1) (A) (ii) and (ii). It is an organization of higher learning (as described in part 3304 (f), and (B) such sum would be admissible as a deduction subject to this section, but in consideration of the detail that the taxpayer accepts (directly or indirectly) as a consequence of compensating such sum the precise to purchase coupons for places at a sports event in an athletic stadium of such organization. If any part of a fee is for the procurement of such tickets, such part and the lasting portion (if any) of such fee shall be acted upon as separate sums for dedications of this subsection.From that law, it is clear that Elizabeth will not be exempt from paying the tax on his tickets his $2000 is taxable as detailed in the above law. According to the taxability of complimentary University athletic ticket important issues comes out very clearly. Since the policy is used to establish, the criteria used to determine the level of taxation of complimentary university sporting events. The occasion tickets are always not taxable as long as they are of nominal value. Season tickets are not payable as long as the games do not sell out. Since men's tickets usually sell out and the policy is that any person receiving this complimentary ticket is subject to all applicable taxes.

CONCLUSION

Taxpayer payments that are to a charitable organization are not deductible under the US Code 170. Under the same Code, the law makes the payment deductible if the money that was paid to the donor organization was not for society and education purpose. If a donor is going to benefit from a donation, then the donation does not fall under the code mention earlier, and such amount is subject to all the tax that are applicable it. After the analysis above notwithstanding the $ 400 for the season, you will still have to pay the tax on $2000.For $ 400 the admission tax of 30% duty applicable. The taxes payer is asked to pay the quoted amount failure to which he risk prosecution by the IRS

REFERENCES

Internal Revenue Code (IRC) Section (5) 501(c) (3)

Internal Revenue Code (IRC) 170 (l) (1)

Internal revenue code as of November 20, 2008. (2008). Chicago, IL: CCH.