Discussion:Charitable Contributions to a 501(c) 3
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Discussion Forum Index --> Advanced Tax Questions --> Charitable Contributions to a 501(c) 3
Discussion Forum Index --> Tax Questions --> Charitable Contributions to a 501(c) 3
| 2 November 2009 | |
| A printer/designer makes a contribution of brochures,cards,etc. to a non-profit art league 501(c)3.
Is the FMV of the product the deductible amount? If the printer is a one-person show does he deduct only the value of the ink,paper,etc.but not his labor? I'm not sure on how to evalue. I have done some research. I appreciate any and all help. | |
| 2 November 2009 | |
| Did the business deduct the purchase of the products donated? | |
| 2 November 2009 | |
| Not yet. The business is actually trying to determine what the contribution would be worth to them.
If the owner sells 500 cards and envelopes for say, $500.00, to his customers, he wants to know if that would be the value of the contribution to 501c3 | |
| 2 November 2009 | |
| The amount of the deduction would depend, in part, on whether the printer is a corporation. Assuming the printer is a sole proprietor, the deduction is generally limited to the smaller of basis or fmv. However, there is a special rule for donations of inventory that are not made from beginning inventory. | |
| 2 November 2009 | |
| His deduction is his the smaller of FMV and cost basis. Cost basis is full cost of producing the cards. An alternative way is to figure out what his mark up is for the cards and deduct it from FMV to get to cost basis. Let's say his markup is 60%, then his cost is $200 ($500 - $300). See Pub 526, pg. 10. | |
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