Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, March 14, 1994 TAG: 9403150180
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
A: Interest or dividends on obligations of the United States and on obligations or securities of any authority, commission or instrumentality of the United States to the extent included in federal adjusted gross income are exempt from Virginia income tax.
Dividends received from a mutual fund which invested in both taxable and exempt obligations for Virginia purposes are considered taxable by Virginia unless a statement from the mutual fund is attached to the return which details the amount of dividends earned by the fund and summarizes the proration between exempt and taxable dividends.
The mutual fund usually furnishes this statement with the annual form 1099-DIV. Virginia taxpayers are permitted to enter the exempt portion of the dividends as a subtraction from federal adjusted gross income on line 40 of the Virginia form 760. A copy of the statement from the mutual fund must be attached to the return to support the partial subtraction.
Page 25 of the instructions for preparing the Virginia income tax return for 1993 includes a list of interest income from selected U.S. government securities and their status of taxable or exempt income.
Answered by Gary Duerk of Brown, Edwards & Co.
Proving your charity
Q: My understanding is that the IRS will not accept canceled checks as proof of contributions to your church.
What information is required on a church statement to be accepted by the IRS? Do you need detailed information, summary information, Social Security number, financial secretary signature and so forth?
A: For the 1993 tax year, a taxpayer making a charitable contribution of cash to a church or other qualified organization has to keep a canceled check or a receipt or letter from the charity showing the amount and date of the contribution and the name of the organization, or other reliable written records with that information. For noncash contributions, a receipt has to be kept showing the name of the charity, the date and location of the contribution and a description of the property.
Your question, I assume, is more in regard to the changes for 1994 and thereafter. Starting in 1994, the Revenue Reconciliation Act of 1993 has tightened the rules for gifts of $250 or more, whether in cash or property. For contributions of less than $250, the pre-1993-act rules continue to apply.
In 1994, the 1993 act denies a deduction for charitable contributions of $250 or more (cash or noncash) unless the taxpayer substantiates the contribution by a written acknowledgement from the organization. Taxpayers may not rely solely on a canceled check to substantiate a cash contribution of $250 or more. However, separate payments are generally treated as separate contributions and aren't aggregated for purposes of the $250 threshold (subject to IRS anti-abuse rules). Therefore, if you gave $50 a week to your church, for example, you would not need written substantiation from the church for your total contribution of $2,600.
Where written acknowledgement is required, it does not require the taxpayer's Social Security number, but must include the following information:
1. The amount of cash and a description (but not the value) of any property other than cash contributed.
2. Whether the organization provided any goods or services in consideration in whole or in part for the contribution.
3. A description and good-faith estimate of the value of these goods or services or, if the goods or services consist entirely of intangible religious benefits, a statement to that effect.
The taxpayer must obtain the acknowledgement before his 1994 tax return is due or by the extended due date.
Answered by Terrence M. Clem of Miller, Morgan & Co.
by CNB