SE Tax vs. Contribution

[JG EA]

I have a Schedule C client, a performer, who put together an event for the benefit of a charitable organization. The arrangement is to give a percentage of the profit to the charity and the client gets a small percentage of the profit.

So, all income and expenses are going through his business. All ticket sales are in client’s business name, not the name of the charity.

So, is there any way you can think of to count only the client’s portion for SE tax? Or does he have to count it all and take a separate personal contribution deduction?
.

[ChEAr$]

The only way it could have been done,

is for the charity (eligible charity I take it) to have put on the event, collected the dough,
and paid him his portion. But it's too late now.

[taxea]

SE Tax vs. Contribution

right again! Since the tickets are in client's company name client is collecting the income which is subject to SE. The donation is taken on the Sch A, not the Sch C..so sorry...taxea

[Lion]

Donation

Was this really organized for the business to profit but the business owner promised to donate a percentage to a charity? Or, did the business have some type of joint venture with the charity or license to use the charity's name for a fee? This is one of those cases where you might be able to educate your client to contact you BEFORE structuring the deal in the future. As has been said, this might have been more advantageous to your client if the charity ran the event and hired your client as a consultant or entertainer or MC or host or.... I hope he promised to donate AFTER tax profit to the charity.

[JG EA]

Thanks everyone.

My client thought they were doing it correctly, but I heard about it after the tickets were printed and checks went to client. They had a deal with the charity from the start, but.... as you said.

They did however put on the tickets "for the benefit of..." and that is where they got feedback from the charity that the tickets would not be deductible. Apparently people buying the tickets thought they would be deductible and asked the charity for receipts and the charity called the client.

Thanks for all your help.

[DaveO]

Had he agreed to pay the charity a "commission" based upon ticket sales for their promotion of the event I think he could have deducted it as such. He can't make a donation without first realizing the income.