Apply this exclusion only to a child who has not attained age 18 and who has a life-threatening condition.

An in-kind gift is any food, shelter, or other item donated to the child or another individual on the child’s behalf. An in-kind gift cannot be cash itself.

A gift is for the benefit of the child if the giver intends the gift for the use, welfare, or enjoyment of the child. However, the gift still meets the benefit of the child criteria if it benefits more people than just the disabled child; for example, shared electronics like a computer or television or a family trip. Interpret this definition broadly.

Under the Internal Revenue Code, a section 501(c) (3) tax-exempt organization is a corporation, or any community chest, fund, or foundation, organized and operated exclusively:

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  for religious, charitable, scientific, testing for public safety, literary, or educational purposes; or

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  to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment); or

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  for the prevention of cruelty to children or animals.

Neither private shareholders nor individuals may benefit from any part of the net earnings of the organization. A substantial purpose of the organization may not be lobbying or attempting to influence legislation. The organization may not participate in or intervene in any political campaign for or against any candidate for public office. The Internal Revenue Service (IRS) issues certification to organizations that qualify for this exemption. (For how to develop evidence of certification, see SI 00830.750E in this section.)

Eligibility for the exclusion depends on both the giver of the gift and the recipient. The recipient of the gift must be under age 18 and have a life-threatening condition. The donor must be an organization described in Section 501(c) (3) of the Internal Revenue Code of 1986, which is exempt from taxation under Section 501(a). For more information regarding section 501(c) (3) organizations, see SI 00830.750D.3, in this section.

Exclude from income the following gifts to, or for the benefit of, a child:

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  Any in-kind gift, not converted to cash; and

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  Cash gifts to the extent that the total cash we exclude under this provision does not exceed $2,000 in any calendar year. Cash the individual receives in excess of $2,000 in a calendar year is subject to regular income counting rules. For example, we exclude $2,000 of a $2,500 cash gift and count the remaining $500 as income.

NOTE: For instructions regarding how to determine whether to consider a gift card cash or an in-kind gift, see SI 00830.522.

If the gift met the criteria for you to exclude it under a different resource provision (i.e. auto exclusion), exclude from income the funds received when the payee converts the gift to cash.

NOTE: This policy is in place to prevent differing treatment of converted excluded resources depending on their source. For example, per SI 00815.550, an excluded resource that was an in-kind gift from a family member would not be income if the payee converted it to cash.

EXAMPLE: A nonprofit agency donates a car to the family of a child with a life-threatening condition so the family may transport the child for weekly medical care to a city 200 miles away. This is the family’s only vehicle. The family sells the car and moves to the treatment city. Do not count the cash the family received from the sale of the car as income. We originally excluded the car under this “Gifts to Children with Life-Threatening Conditions” provision, but we could also have excluded it from resources under the automobile exclusion. Treat any cash the family retains into the following month as a resource. (For information on receipt from the sale of certain non-cash items, see SI 00815.550.)

Apply this provision to gifts received on or after 10/28/96.

Exclude a gift to a parent whose income is subject to deeming (subject to the limits in SI 00830.750C.2.) if the gift is for the benefit of a child described in SI 00830.750B.2.

EXAMPLE: The parents receive a trip to Disney World to accompany their child and the child’s trip is excludable under this provision. The parents’ portion of the gift benefits the child to the extent that it allows the parents to accompany him, provide supervision, support, companionship, etc.

Exclude from resources those gifts excluded from income in this section. For complete instructions regarding how to treat gifts to children with life- threatening conditions as resources, see SI 01130.689.

Do not exclude from income or resources any interest or dividends earned on funds excluded by this provision.

Document the individual's allegation of receipt of a gift as described in this section by noting:

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  date of receipt;

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  amount or value of gift;

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  type of gift (cash or in-kind) and if in-kind, what it is specifically; and

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  tax-exempt donor organization’s name, address and phone number.

Document all of the information on a Report of Contact page, as well as any other material evidence submitted by the tax-exempt donor organization. (For more information on how to document evidence, see GN 00301.286 and MSOM EVID 001.003.)

Complete the appropriate MSSICS screens (e.g., IOTH) related to the type of gift received. Code the exclusion reason with the tax-exempt donor organization’s name.

Accept an oral or written statement from the organization that it gave the gift to or on behalf of the child based on the child having a life-threatening condition; no additional medical development is necessary. Annotate a Report of Contact page with this information and lock it.

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  Determine if the non-profit donor is an IRS-approved tax-exempt organization by entering the name of the organization and searching the Atlanta Precedent and Contacts (APAC) intranet site:

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  If a precedent exists, and the provisions of this section apply to the gift, create a Report of Contact page noting APAC precedent as proof of the organization’s tax-exempt status and lock it.

If no precedent exists, contact the donor organization and request that they fax or send a copy of its state nonprofit certification or its determination letter from the IRS.

When evidence is in hand:

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  Note the date the state nonprofit certification or determination letter from the IRS was received on a Report of Contact page and lock it;

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  Fax the evidence into Eview or NDReD; and

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  Go to the APAC intranet site and follow the steps listed there to create a national precedent. To create the precedent, categorize the contact type as “non-profit organization” and the precedent type as “IRS tax-exempt certification.”

The Make-A-Wish Foundation provides a trip to Walt Disney World to a terminally ill child. The trip includes all expenses for the child, his parents and his sister; e.g., transportation, food and lodging, and $1,500 for other expenses. Exclude the entire gift from income and resources, even the portion that allows the parents and sister to accompany the child. The parents provide supervision and assistance to the child, which allows him to take the trip. The primary benefit of the parents’ participation in the trip is to facilitate the eligible child's enjoyment of the vacation.

From December 2010 to January 2011, three separate tax-exempt organizations provide cash gifts to a terminally ill child.

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  The first organization gives $1,800 to the payee, for the child’s benefit, on December 11, 2010;

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  The second gives $500 on December 21, 2010; and

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  The third gives the child $880 January 2, 2011.

The child received $1,800 + $500 = $2,300 total in December 2010. We exclude $2,000 of the $2,300 per SI 00830.750C.3.c. The remaining $300 is countable income in December 2010.

NOTE: We count the $880 the child received on January 2, 2011 toward a new $2,000 annual income exclusion threshold because the payee received the money in a new calendar year. However, regard any funds received and excluded as income in December, that are still in the payee’s possession as of January 1, 2011, as a resource. If by January 1, 2011 the payee has not spent any of the $2,300 that he or she received in December 2010, we exclude only the first $2,000 under the resource exclusion and count the remaining $300 as a resource. (For more on the resource exclusion for “Gifts to Children with Life-Threatening Conditions,” see SI 01130.689.)