Lanna writes:
I have a question , I have a small busniess, and have come up with a plan to Adopt a grandparent for mohters day. which means I would go to local busniess for $25 they would sponser a lady in a nuring home or hopsic that $25 would in purchas a small gift that i would intrun give that lady. What is the law on the tax side of the nursing home or hospic care?
My reply:
From my understanding of your post, the nursing home wouldn't come into play at all because they would not be receiving anything (the lady in the nursing home does) and they aren't paying anything (the businesses are).
Lanna's response:
That is correct ... so does that effect the nuring homes taxes if they are not the ones receiving but their residents do? I belive that the sponser would be able to write that off their donation.My final reply:
Lanna,
The sponsor is the person who is paying the money, which I believe you said the individual businesses would be paying the money. They get a deduction for the money they give you.
You receive the money, so depending on your type of business you need to either record it as income or contribution received (if you're a non-profit). Then you spend money on the gift, which you get to deduct.
The lady in the nursing home receives your gift. Since it is a gift the lady in the nursing home does not have to report the receipt of the gift on her tax return.
The fact that the lady happens to be living in a nursing home does not come into play at all. There is no transaction between anyone and the nursing home (at least not the way I understand your email), so there's no accounting to be done on the nursing home's books. No income/no deduction.
The only way the nursing home would come into play at all is if YOU are the nursing home. And if so, I already explained how that would work above. What you've described in your email is not a sponsorship.
This is an extremely busy weekend for me so please excuse me for my directness.
The sponsor is the person who is paying the money, which I believe you said the individual businesses would be paying the money. They get a deduction for the money they give you.
You receive the money, so depending on your type of business you need to either record it as income or contribution received (if you're a non-profit). Then you spend money on the gift, which you get to deduct.
The lady in the nursing home receives your gift. Since it is a gift the lady in the nursing home does not have to report the receipt of the gift on her tax return.
The fact that the lady happens to be living in a nursing home does not come into play at all. There is no transaction between anyone and the nursing home (at least not the way I understand your email), so there's no accounting to be done on the nursing home's books. No income/no deduction.
The only way the nursing home would come into play at all is if YOU are the nursing home. And if so, I already explained how that would work above. What you've described in your email is not a sponsorship.
This is an extremely busy weekend for me so please excuse me for my directness.
Best wishes,
Gina
http://GLGcpa.com
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