united-states tax-law
Can I give money to another to give to charity, so she gets a deduction?
<p>This is a question about Step Transactions.  IRS, USA. </p>

<p>Suppose I am retired and of limited income, so my tax bracket is about 10% and I don't itemize.  </p>

<p>I want to give $10,000 to a 501(c)(3) charity.   But I won't get any tax benefits if I do, because that won't overcome the new itemization threshold of $12,000.  </p>

<p><strong>My plan is to give the money to Judy, who will then give it to the Nature Conservancy</strong>.  Judy is in a 32% tax bracket, so will get back $3200 of net tax benefits.  My gift isn't taxable income to Judy, since it's under the $15,000 gift tax exclusion.  </p>

<p>Judy's onward gift is not optional. She must agree to donate it or no deal. </p>

<p><strong>Does this violate the "Step Transaction Doctrine"?</strong> Effectively Judy is getting $3200 knocked off her taxes that I am not eligible to take.</p>

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<p>Second scenario.  Suppose I am an old-school conservative and believe in conservation, but the new conservatives would be gravely offended to see me donating to the Nature Conservancy.  That would hurt my planned State Senate run.  <strong>This motivation is entirely innocent, and the tax benefit is an unexpected side-effect</strong>.  Does that change the picture? </p>

<h2>Judy's onward gift is not optional. She must agree to donate it or no deal.</h2>

<p>This is where the problem lies - you are not giving her a gift because a gift carries no obligations, you are contracting with her to make a $10k donation for which you will pay her $10k. As such, this is assessable income to her.</p>

<p>As op mentioned, this a simple and straightforward step transaction case. Judy isn't making any charitable contribution - op is. Judy's claim of tax deduction in this case would be inappropriate and even borderline fraudulent. </p>

<p>If I were in Judy's place, I would check with someone knowledgeable about this before I do something rash.</p>
