In 2012, Gale and Cathy Alexander hosted an exchange student, Axel Muller, for 9 months. Axel was part of International Student Exchange Programs (a qualified organization). Axel attended tenth grade at the local high school. Gale and Cathy did not claim Axel as a dependent but paid the following items for Axel's well-being:
Food and clothing................................................................$1,500
Medical care...........................................................................200
Fair market value of lodging......................................................2,700
Entertainment...............................................................................100
Total.................................................................................$4,500
Gale and Cathy have asked for your help in determining if any of the $4,500 can be deducted as a charitable contribution.
Required: Go to the IRS Web site (www.irs.gov) and locate Publication 526. Write a letter to Gale and Cathy answering their question. If they can claim a deduction, be sure to include in your letter the amount that can be deducted and any substantiation requirements. (An example of a client letter is available at the Web site for this text located at www.cengagebrain.com.)