What is the quid pro quo rule and what are the value limits for premiums?
(Jan. 16, 2003) – To account for inflation and other factors, the Internal Revenue Service (IRS) has increased the limit on the value of insubstantial gifts given by charities to donors in exchange for contributions. Under the federal quid pro quo rule, if donors receive a gift from a charity as a result of a contribution, they must subtract the fair market value of that gift from the charitable deduction they would take as a result of the contribution. For example, if a donor gave $500 to a charity, and in return received concert tickets valued at $120, the maximum deduction the donor could take for the contribution is $380 ($500 – $120 = $380). The charity also would be required to disclose the benefit on the charitable receipt. However, the IRS has long ruled that certain gifts have so little value, or have such a small value in comparison to the size of the donor’s contribution, that the donor receives only an ‘insubstantial’ benefit. In this case, the value of those gifts does not
