Deduct Triathlon Expenses?

[Deleted]

This really isn't as flaky as it sounds.

Three of us from my parish completed a city triathlon (half the Olympic tri distances) in order to raise money for a school we're helping to build in Haiti. Friends, relatives and parishioners pledged to donate money to support us.

I'm planning to deduct the $95 registration fee and the $75 wet suit rental (hey, it was cold in that lake!), both of which I paid personally. The amounts are small enough I don't think the IRS will take issue with it, but what would be the official line on this- deductible or not?

Thanks.

[mwcpa]

these costs are NOT deductible, based on the facts presented.... the fact that the costs are small has no relevance on what the law states.....

For out of pocket costs to be deductible the costs must be incurred in connection with something done for a qualified US charitable organization.....

Now, had the church group organized the event and and you covered these costs that would probably result in a different answer....

[Deleted]

Thanks! Not the answer I wanted, but good to know how the IRS would view it.

At least the check I'm writing to support the building of the school (written directly to the church) will be deductible. And I did have fun at the Triathlon. ;D

[zibazinski]

I was surprised that the Susan Komen Race for the Cure registration fee was not even partially deductible.

[commentator]

This is a rare occasion in that I disagree with mwcpa. (I do so with some trepidation, by the way.)

From the OP's facts it appears she incurred these out of pocket costs for the benefit of her church which is likely a qualified U.S. organization for purposes of the charitable contribution deduction. If the church agrees, it should be willing to provide a letter to the OP acknowledging the charitable purpose for which the costs were incurred.

[Deleted]

May 24, 2011 12:02:55 GMT -5 @commentator said:

From the OP's facts it appears she incurred these out of pocket costs for the benefit of her church which is likely a qualified U.S. organization for purposes of the charitable contribution deduction. If the church agrees, it should be willing to provide a letter to the OP acknowledging the charitable purpose for which the costs were incurred.

Thanks for the second opinion! Yes, my church is a typical US-based church and our priest is very good about writing what he calls "in kind" letters for appropriate out-of-pocket expenses. DH and I directly picked up the cost of an Easter postcard mailing, for example. The donations from parishioners in support of the triathlon go into a general checking account (same one as the collections) but are then earmarked for the Haiti mission. I think I'll get a tie-breaker opinion from my brother, who's the tax partner at a large (but not Big 6) firm and go from there.

[mwcpa]

as I noted in my original post, if a qualified charitable organization (like your church group) was sponsoring the event you could have a possible deduction....my answer was not as clear cut as is assumed here....

here is what I said "Now, had the church group organized the event and and you covered these costs that would probably result in a different answer...."

the original facts did not make it clear that the Church was setting up this event or what you planned to do if you won a prize as a result of your participating (assuming this race had a prize) ..... an issue would arise if this race came with a prize... then you would be hard pressed to say that your entering the race was solely to raise funds for the Church unless you made it known beforehand that the prize was going to the charity if you won... from IRS publication 526 "You cannot deduct as a charitable contribution.... The part of a contribution from which you receive or expect to receive a benefit"... entering a race that comes with a prize infers that you "expect" a benefit....(let's say I am a semi-professional triathlete (is that a word), I enter a race that has a cash prize of $1,000 to the winner, a group I belong to says if I finish the race they will contribute $X to a charity, not only did I finish the race I won.... my entry fee is not a charitable gift because others did what they did.... now same facts and I make it clear that I would give any prize to charity before I competed then maybe you'd have a shot a their being a charitable intent of your entering the race)

the expanded facts may give rise to a charitable gift... but you would have a stronger case if this event was "sanctioned" (cannot think of a better term right now) by the Church and if you made it clear before you entered the race that any "benefit" you derived would be given to the Church... before the race occurred....

[mwcpa]

"I was surprised that the Susan Komen Race for the Cure registration fee was not even partially deductible"

More than likely the value of the "benefits" you received in return exceeded the fee/contribution you paid... from IRS publication 526...

"You pay $65 for a ticket to a dinner-dance at a church. All the proceeds of the function go to the church. The ticket to the dinner-dance has a fair market value of $25. When you buy your ticket, you know that its value is less than your payment. To figure the amount of your charitable contribution, you subtract the value of the benefit you receive ($25) from your total payment ($65). You can deduct $40 as a charitable contribution to the church. "

Based on that example, it sounds like you received benefits greater than the cost of the entry fee.

[Deleted]

May 24, 2011 16:36:28 GMT -5 mwcpa said:

an issue would arise if this race came with a prize... then you would be hard pressed to say that your entering the race was solely to raise funds for the Church unless you made it known beforehand that the prize was going to the charity if you won

Well, I was not expecting to receive a prize, but despite coming in 246th out of 247 entrants, I got a prize for coming in 3rd in my age group (women aged 55-59, which had only 3 participants in the group!). It was a very large (empty) beer mug with the event information on it and the logos of the sponsors. I don't think the church would have a use for it but I could certainly see that I'd have to offset any deduction by some reasonable valuation of the beer mug.

[commentator]

I would argue that no benefit was received other than good feelings for having done a good deed. The mug's value is probably de minimus and therefore excluded. It is the obligation of the charity to provide a dollar value for goods and services received by the donor.

If the wet suit had been purchased, instead of rented, that cost would not have been deductible.

Please let us know what your brother says.

(I'm still feeling uncomfortable disagreeing with mwcpa -- I keep looking over my shoulder, having trouble sleeping, loss of appetite, etc.)

[mwcpa]

no worries commentator... we can disagree, you have good points in your comments here.... that's why taxes can be so damn confusing, two competent people can have different points of view on a matter that can go one way or the other.... more facts keep coming in with each new post which adds the the mix...I am now more of the opinion that the race was not a fun run and was a competition, making none of the out of pocket costs deductible... this was not a charity race with token prizes (like say the MS walk), this was a real race that someone entered and happened to pair it with a charitable thing, after the fact.... the value of the prize has no relevance here....

In reality, given the size of the dollars, IRS would probably not even look at this, but that does not mean you can deduct it.... having the audit lottery for tax planning and preparation as the only basis for a position on a tax filing is illegal.

by the way, i am not one to fear...it's that guy who will remain nameless who wanted to come at me with his second amendment equipment from our neighbor to the north... hahahaha... (for others, this is an inside joke, and if the person who shall remain nameless reads this... I really do not care.... we all know you are a blowhard who is tough from behind the keyboard)

[commentator]

;D

He who shall not be named (mostly because he keeps changing his name) is

[TheOtherMe]

[Deleted]

mwcpa's side wins. Here's my brother's reply.

"If I read your email correctly, the entity putting on the Triathlon is not a charitable organization. If they are not, then no chance on the $95. Regardless, I would say the $75 is N/D. If the entity that organized the Triathlon is a charitable organization AND they give you a receipt saying you made a contribution, you’re in luck. With the change in tax law a few years ago, if you don’t have written acknowledgement from the organization of the contribution, it is not deductible."

He may be my "baby" brother, but I'll defer to his expertise on this.

[commentator]

Those big accounting firms' tax guys have been gun shy ever since Boss and Son of Boss.

However, he (and mwcpa) are probably correct.

[zibazinski]

Uh, well, I don't even buy nice shirts that cost that much, let alone a poorly made t-shirt. Makes me think that perhaps a lot of the money raised gets "siphoned off" somehow which is why the IRS disallows any of the fee to be deducted.

[Deleted]

May 26, 2011 11:43:44 GMT -5 zibazinski said:

Uh, well, I don't even buy nice shirts that cost that much, let alone a poorly made t-shirt. Makes me think that perhaps a lot of the money raised gets "siphoned off" somehow which is why the IRS disallows any of the fee to be deducted.

zibazinski, the entity organizing the triathlon made no claims about it being a fund-raiser. The fund-raising part was the members of my parish making donations to the parish ministry in support of the 3 of us who competed. A lot of the triathlon can be done by volunteers (painting race numbers on arms and legs, handing out water bottles, checking people in) but I imagine there are some real out-of-pocket expenses such as lifeguards, standby EMTs, liability insurance, park permit fees and publicity costs.

I'm OK with the $95 fee- I had a heck of a good time and have pushed my limits a little. This was my first time swimming in a wet suit and the distances were 50% more than I'd done in previous triathlons. At age 58, finding that you can do more than you expected is a great feeling!

[zibazinski]

There is that.

[pig]

What a great question! Good answers too.