Form 1099-MISC Erroneously Issued for Benevolent Gift

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Question:

A church issued a Form 1099-Misc for a $5,000 gift given to an individual that suffered a life threatening accident to help her with therapycosts. Is this correct? Should this gift be taxable at a regular rate?

Answer:

Form 1099-MISC is used to report compensation to individuals not under the employ of the issuing organization. If no services are or will be required for the $5,000 benevolence gift listed in the question above, then this amount should not be reported on Form 1099-MISC and will not be reported as taxable income by the recipient. According to IRS Publication 525, gifts to individuals not in the employ of the donor are non-taxable. A corrected Form 1099-MISC should be prepared immediately.

For more blog posts on benevolence gifts, readers should follow the links provided below:

http://ministrycpa.blogspot.com/2010/01/form-1099-misc-for-benevolent-gifts.html

http://ministrycpa.blogspot.com/2009/10/benevolent-gift-rules-review.html

http://ministrycpa.blogspot.com/2012/04/benevolence-not-reportable-on-form-1099.html