Of course they do. And of course, the IRS audit is all on you.
Other than actual cash or non-cash donations given directly to a qualified charitable organization, like the NAS Community Fund, a registered 503 (c) charitable organization, it is possible to also deduct unreimbursed Out of Pocket Expenses. It is stipulated in IRS Publication 526, however, howthese expenses must be incurred: "you may be able to deduct some amounts you pay in giving services to a qualified organization". It is in that stipulation that I have a hard time wrapping my mind around.
What service to any organization is served in competing in an Ironman? The list of recipients of Community Funds is long and genuine, but no physical 'serving' is accomplished in the 17hrs or less of Ironman toil. When you donate money to church, for example, do you write off your job expenses because you were using that job to raise the money you donated? No, and you couldn't if you wanted to. Could you write off expenses you incurred while volunteering at a church function? To some degree, yes. The service must be directly related to the charitable contribution, not as a result of it.
Put it this way: your church service example is such that your actions while volunteering directly contribute to the raising of money for the charitable organization. Your actions at Ironman are a byproduct of your initial charitable contribution. If you contributed and didn't race, the charity would not suffer in the least.
Perhaps it is a subtle distinction, and I'm sure someone with more accounting and tax experience than I, like a CPA, could argue for the deductions. I'd be curious to see how the deductions held up to the scrutiny of an IRS agent, however.
One of the interesting documentation requirements of the deduction is that in addition to keeping the appropriate record of the expenses, the taxpayer MUST also obtain acknowledgement from the charitable organization that contains:
- a description of the service you provided
- a statement of anything you received as reimbursement (if any) for your expenses
- a valuation of any goods or services you received
- a statement that only intangible benefits were received.
Good luck getting that statement before filing your taxes. Oh yea, and try and put a value on the benefits of Community Slot entry - the fleece, the visor and backpack. Oh, and entry into an otherwise sold-out event. So what is the value of entry to an event otherwise unable to enter? Does that move into the realm of "Tangible benefit" vs. intangible? Good question.
The $775 donation is, of course, charitable and deductible (of course, only if you use a Schedule A - do you have a mortgage? If not, then you probably don't itemize your deductions, and therefor, disregard this whole post - you can't deduct your charitable donations period). Please, someone, shed some light on how the expenses can also be deductible!
Sorry, btw, for the boring tax-related post.
Edit: I don't know how often this has happened in the past, but I was inspired to write this when a friend said his CPA had already said it was ok. I looked at the IRS Pub that covers this part of Tax law, and of course it was clear as mud. Getting the documentation, for those out there that are still going by what their CPA "who has done taxes for years" says is ok, will be the kicker - as is the general argument that the act of racing is not a service to a charity. Perhaps something like the MS ride series - where you personally solicit donations and those are based on your completion of the event - could be a valid example of training and travel expenses that are deductible. I doubt the IRS Agent completing your audit will be so impressed with your IRONMAN finisher's medal that he or she will overlook your $5k in Charitable Iron Expenses.