If a person is owed money by a charity and s/he subsequently forgives the debt, can the amount forgiven be claimed as a charitable contribution?
A. The answer will depend upon the circumstances. For example, assume the person made a loan to the charity, in good faith and with the expectation of being repaid, but then later decided that the organization did not have to repay the loan. In that situation, the lender would be entitled to claim a charitable contribution because s/he originally expected to be repaid, but forgave the loan because of generosity ( charitable intent). As a matter of good practice, both the loan and the forgiveness should be evidenced by written documentation.
