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  • 1.  Corporate Contractual Agreements

    Posted 04-27-2022 01:55 PM
    We have an agreement where the landowner of one of our academic buildings pays the property taxes for the property we lease.  He is willing to waive our responsibility to reimburse him for those property taxes as part of his gift for the remaining 17 years of the lease contract.  He already has a lawyer involved to draw up the paperwork to allow this to happen legally.  The added interesting twist is that he would like to designate where the funds we don't spend on those taxes are spent.

    This is sort of a corporate sponsorship that includes 0 advertising.
    This is sort of a pledge that would run for 17 years.
    The current tax year value is somewhere in the neighborhood of $175,000.  (I don't have documentation, yet.  Just a phone call to figure this part out.)

    Can I book this?  If so, how?
    Do I book it as a 17 year pledge?
    Do I book it as a gift-in-kind for the estimated total?
    Do I only worry about a smaller window?  (We only allow pledges of 5 years in length.)
    Can I designate the monies to a specific fund of the donor's choosing?

    Thanks in advance for your advice.

    ------------------------------
    Joel Clasemann
    Director of Advancement Services
    The College of Saint Scholastica
    jclasema@css.edu
    ------------------------------


  • 2.  RE: Corporate Contractual Agreements

    Posted 04-27-2022 03:26 PM
    Yikes.  I cannot say I have seen anything like this one!

    I cannot see how you can do much more than record an annual GIK for the amount of the taxes - once you have proof of who paid the taxes and how much.

    I wouldn't record a pledge without the donor signing a pledge agreement stipulating a minimum amount of taxes to be paid.

    The addendum or revised contract indicating that the donor would be legally responsible for those tax payments could serve as a "pledge" of sorts.  But your CFO would likely need to agree to the amount to carry on the books.

    Of course, CASE wants us to only count pledges in five-year increments.  They give us some leeway in extraordinary circumstances.  That's going to be an internal decision that includes your Advancement and Finance leadership.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Corporate Contractual Agreements

    Posted 04-28-2022 10:11 AM
    Joel, usually in a commercial lease, the share of taxes paid by the tenant is a term of the lease, but the incidence of the tax is fundamentally on the property owner. You're not reimbursing the landlord for paying a tax on your behalf. Rather, the landlord is simply collecting rent to cover their expenses. Agreeing to not charge you some amount of tax is the same, I believe, as agreeing to decrease your rent by some amount. That's not a charitable gift, at least as I'm understanding the facts. It's a partial interest gift that is further dependent on you continuing to be a tenant. I'd add that this seems like an attempt to double-dip: to take the deduction for the property tax payment, and then take a charitable deduction for the exact same dollars. 


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