schirallicpa Posted March 6, 2017 Report Share Posted March 6, 2017 Nonprofit received very large contribution in early 2017. But the contributor had written the check on Dec 31, to take the deduction. When the NP wrote him a very nice letter thanking him for the contribution, they dated the contribution for the 31st to support his taking the 2016 deduction. But - they did not know it was coming, and their books record the money as 2017 income. Not a problem, until I get to the schedule B. If I put him on Sch B with that large contribution, his amount alone will exceed the total revenue for 2016. So that sticks out like a sore thumb. But if I put the lesser amount that was received in 2016 will there be possibility of mismatch later on if his return gets pulled? Can I just put the lower amount, and then put an explanation on schedule O? Or should I include the income on the 2016 990 as an in-transit receivable - even though it was an unknown.......I don't like that idea...... Quote Link to comment Share on other sites More sharing options...
rfassett Posted March 6, 2017 Report Share Posted March 6, 2017 I believe the non-profit's issues are deeper than when to record the revenue. According to your post, the non-profit issued a receipt for something they did not receive nor did they actually know what the amount would actually be. If that does not smell like an issue, I don't know what would. To your present issue, prepare the return you are working on for the period you are working in. Include the revenue in the year the contribution was received. This non-profit may already have enough issues without adding cooking the books to the mix. My response may sound harsh and I apologize if it comes across that way. But that is what I see in your post. Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted March 6, 2017 Report Share Posted March 6, 2017 1 hour ago, schirallicpa said: Nonprofit received very large contribution in early 2017. But the contributor had written the check on Dec 31, to take the deduction. When the NP wrote him a very nice letter thanking him for the contribution, they dated the contribution for the 31st to support his taking the 2016 deduction. But - they did not know it was coming, and their books record the money as 2017 income. Not a problem, until I get to the schedule B. If I put him on Sch B with that large contribution, his amount alone will exceed the total revenue for 2016. So that sticks out like a sore thumb. But if I put the lesser amount that was received in 2016 will there be possibility of mismatch later on if his return gets pulled? Can I just put the lower amount, and then put an explanation on schedule O? Or should I include the income on the 2016 990 as an in-transit receivable - even though it was an unknown.......I don't like that idea...... Does your state require a financial audit? Our state (state's attorney general) does when income is above $300K, most likely an auditor will not consider the letter dated on the 31st, but would recognize the revenue as received in 2017. The contributor is the only one who won. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted March 6, 2017 Report Share Posted March 6, 2017 I don't think that the letters sent or the Sch B contributions are actually matched up to deductions taken by tax payers, although I could be wrong. But the contributor intended to contribute in 2016, and presumably mailed the check in 2016 so he deducted the check in 2016. The non-profit received the money in 2017, so they recorded the revenue in 2017. I would not worry too much about the matching issue. Although if it does turn out that somebody gets an CP2000 or equivalent asking about this contribution, I would love for you to follow up and tell us. Quote Link to comment Share on other sites More sharing options...
jasdlm Posted March 6, 2017 Report Share Posted March 6, 2017 I agree with Gail. If the check was out of the taxpayer's hand by the 31st of December, he is fine on the deduction, and you should report the income in the year it was received. Quote Link to comment Share on other sites More sharing options...
schirallicpa Posted March 7, 2017 Author Report Share Posted March 7, 2017 Thank you Gail, jasdlm, I think that is where I was leaning. Certainly no one is trying to cook any books. I just had not come across this situation before, and since it is a large amount of money, the matching issue swatted me in the face. Yes - I will post again if I hear of a notice - however, I do not know the contributor and I suspect he would be the recipient, not my client the non-profit. Quote Link to comment Share on other sites More sharing options...
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