Purpose of This Memo
This summary outlines the anticipated federal income tax treatment of contributions to the The Forgotten Prisoner Foundation, assuming approval as a Section 501(c)(3) public charity under the Internal Revenue Code. Donors should consult their own tax advisors regarding their specific circumstances.

 

Federal Tax Deductibility

If the Foundation receives IRS recognition as a 501(c)(3):

• Contributions are generally tax-deductible charitable donations


• Donations reduce taxable income, not taxes dollar-for-dollar


• Deductibility is subject to Adjusted Gross Income (AGI) limitations


• Excess contributions may be carried forward up to five years

 

Individual Donors

Cash Contributions
Deductible up to 60% of AGI for federal income tax purposes.

Appreciated Securities (held > 1 year)
Deductible up to 30% of AGI at fair market value.
No capital gains tax is incurred on the appreciation.

Illustrative Example
A donor in the 37% federal bracket who contributes $100,000 in cash may reduce federal taxable income by $100,000, resulting in an approximate federal tax savings of $37,000.
The effective after-tax cost may be approximately $63,000, subject to individual circumstances.

 

Appreciated Asset Strategy

Donating appreciated public stock or other long-term capital assets may provide enhanced tax efficiency:

• Full fair market value deduction (subject to AGI limits)


• No capital gains tax on appreciation


• Often more advantageous than selling and donating proceeds

 

Cannabis Industry Operators – Special Considerations

Due to IRC Section 280E, cannabis businesses cannot deduct ordinary and necessary business expenses related to trafficking controlled substances. However:

• Charitable contributions are generally treated separately from ordinary operating expenses


• C-Corporations are typically limited to deducting charitable contributions up to 10% of taxable income


• For pass-through entities (LLCs, S-Corps), deductions generally flow through to owners and are subject to individual AGI limits

Donors should confirm treatment with qualified tax counsel, particularly where 280E applies.

 

State Tax Considerations

State tax deductibility varies by jurisdiction. Donors should review state-specific rules with their advisor.

Lobbying Limitation

If structured solely as a 501(c)(3), the Foundation may engage in limited lobbying but cannot participate in political campaign activity. Contributions remain deductible so long as the organization maintains compliance with IRS regulations.

 

Acknowledgment Requirements

To substantiate deductions:

• Donors will receive written acknowledgment for contributions of $250 or more


• No goods or services may be provided in exchange for tax-deductible contributions unless properly valued and disclosed

 

Conclusion

Contributions to the forgotten prisoner Foundation, which is  federally recognized as a 501(c)(3), are expected to qualify as tax-deductible charitable contributions subject to applicable IRS limitations. For many high-income donors, the effective economic cost of a contribution may be materially lower than the face value due to income tax savings.

 

All donors are encouraged to consult their tax advisor prior to making a contribution.