Quid Pro Quo Contribution

AAA

DEFINITION of 'Quid Pro Quo Contribution '

A charitable donation for which the donor receives something from the recipient in exchange. A quid pro quo contribution has different rules for federal income tax deductibility than a regular charitable contribution, for which the donor receives nothing from the charity in return. The IRS considers as tax deductible only the amount of the contribution in excess of the value of the good or service the charity gave the donor.

INVESTOPEDIA EXPLAINS 'Quid Pro Quo Contribution '

During her favorite public radio station’s local pledge drive, Ann donates $150. As a thank you from the radio station, she receives a gift certificate for a cooking class that would normally cost $70. (The public radio station is able to offer such a generous premium because a sponsor donated it.) Ann’s contribution is considered a quid pro quo contribution because she receives something in exchange for her donation.

Since Ann donated more than $75, the Internal Revenue Service requires the public radio station to send her a letter stating that the amount of Ann’s $150 contribution that is deductible on her federal income tax return is limited to $80 – the amount of her contribution minus the $70 fair market value of the cooking-class gift certificate she received.

RELATED TERMS
  1. Proof of Charitable Contributions

    Substantiation required by the Internal Revenue Service for a ...
  2. Readvanceable Mortgage

    A mortgage feature that allows the borrower to re-borrow the ...
  3. The Smith Maneuver

    A strategy that makes interest on a residential mortgage tax-deductible ...
  4. Charitable Contributions Deduction

    One of the itemized deductions available for taxpayers who donate ...
  5. Form 4684: Casualties And Thefts

    A tax form distributed by the Internal Revenue Service (IRS) ...
  6. Charitable Gift Life Insurance

    A method of contributing to charity by taking out life insurance ...
RELATED FAQS
  1. Can I donate stock to charity?

    Giving stock, instead of cash, as a donation can greatly benefit both parties. You will find that most charities, hospitals, ... Read Full Answer >>
  2. What are the advantages to structuring a business as a master limited partnership ...

    A master limited partnership (MLP) offers tax benefits for corporate entities that can reduce the cost of capital for capital-intensive ... Read Full Answer >>
  3. What is an adjusted cost basis and how is it calculated?

    The cost basis of an investment or asset is an important consideration in tax planning for individual investors, business ... Read Full Answer >>
  4. How is salvage value used in depreciation calculations?

    When calculating depreciation, an asset's salvage value is subtracted from its initial cost to determine total depreciation ... Read Full Answer >>
  5. What are some ways to minimize tax liability?

    Minimizing tax liability is one of the most important financial planning aspects for business owners and individuals each ... Read Full Answer >>
  6. Can the government tax your capital gains from other countries?

    Income earned by U.S. citizens is subject to taxation by the IRS regardless of where it was generated. The government of ... Read Full Answer >>
Related Articles
  1. Personal Finance

    Don't Judge A Charity Based On Administrative Costs

    It is unwise to base charitable giving on administrative costs.
  2. Entrepreneurship

    How To Start A Charity

    Here's a detailed guide that provides the steps needed to start a charity.
  3. Retirement

    Gifting Your Retirement Assets To Charity

    There are several things to consider when it comes to this type of charitable giving. Make sure you're well informed.
  4. Personal Finance

    Charity CEOs: Are They Being Paid Too Much?

    Deciding how much charities should spend on the salaries of their CEOs is more difficult than you may think.
  5. Personal Finance

    Is The Billionaire Charity Pledge A Good Idea?

    Will Bill Gates' call for billionaires to become more active in charitable giving do all the good it could?
  6. Taxes

    Give To Charity; Slash Your Tax Payment

    Being generous has never been more (financially) rewarding!
  7. Taxes

    How To Spot Dubious Haiti Charity Pleas

    Make sure your dollars get to the earthquake victims, not the scamsters.
  8. Professionals

    Top Tips for Retirement Account Withdrawals

    Top things you need to know when it comes to managing the complex task of retirement account withdrawals.
  9. Taxes

    Tips on Charitable Contributions: Limits and Taxes

    An overview of the limits and tax deductions of charitable donations.
  10. Retirement

    Don't Make These Top 10 Mistakes On Your Roth IRA

    Don't lose out on the benefits of a Roth by contributing too much, breaking rollover rules or making other avoidable errors.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center