donate services - s corp

[oceanlovin'ea]

If an S corp gives a donation to an organization of their services, is this deductible? If so, how is it documented?

Client is a massage therapist. She donated a 1 hour relaxation massage to a non-profit civic organization valued at $55.

Since it is not a cash donation, how would I deduct it?

Linda

[S T]

Donated Service Time

Linda - See TTB 4-15 and chart on upper right, under non deductible as Charitable Contributions is listed about the third one down **The value of a taxpayer's time or services**.

Also see Pub 526 page 7 "Value of Time or Services"

So if even as an S Corp - I don't believe it would be deductible, as it was the "time and labor" that the S corp or shareholder donated.

Might be a possibility for charitable mileage?

Sandy

[Uncle Sam]

Donate Services - S Corp

You don't deduct it.
Donation of services is not tax deductible.
I have a landscape client (S Corp) that does not charge a church for snow removal during the winter, and have advised this client every year that the value of his services cannot be tax deducted.
Other related out of pocket costs for supplies and items used directly in providing the services usually are already costed out and expensed somehow on the profit/loss statement.

[JG EA]

...Other related out of pocket costs for supplies and items used directly in providing the services usually are already costed out and expensed somehow on the profit/loss statement.

Out of pocket supplies, etc: Don't you advise to move from ordinary expenses to charitable contributions which would be on the K-1 as such and not in the profit/loss of page 1?

[Uncle Sam]

Donate Services - S Corp

Okay - tell me how?

In plowing a church parking lot - used 80 lbs of sand, 2 employees' 1 hour time for shoveling pathways plus payroll taxes, 1/4 gallon diesel fuel for truck, 1/4 quart of oil for engine.

Do you think a client can specifically allocate this items exactly - pick the cost exactly out of operating expenses in order to put the total on K-1 for 1040?

[JG EA]

I said advise.

But if the client can't separate the cost (surely he could if he knows it is 80 lbs, how many hours, etc) then perhaps a good faith estimate?

[JohnH]

Why go to the trouble?
I don't see the point of doing all this extra work for no useful purpose.

[JG EA]

Why go to the trouble?
I don't see the point of doing all this extra work for no useful purpose.

Guess I am in a argumentative mood.

Because the contribution line of the K-1 may or may not be used by the shareholder and therefore is not such a favorable deduction. It affects the AGI and so other itemized deductions if any, credits etc.

Because it is not an ordinary and necessary deduction for the profit/loss of the business.

Because I have seen businesses that give away so much to charitable contributions that it would be unscrupulous to pretend all those expenses (and/or inventory) are part of the business expenses.

[JohnH]

Some people call it argumentative, I prefer to call it making your case.

I see your point. I'd go along with doing the calculation when the numbers are significant, but I'd fall back on some sort of common-sense de minimis rule for most situations.

I occasionally give office supplies to my church, but never bother to break it out and still woudn't. On the other hand, if I suddenly decided to go paperless and gave the church all my reams of copy paper, copy machine, pens, pencils, rubber stamps, paper clips, staplers, and file folders, I'd probably do the math.

[ChEAr$]

Yes

Okay - tell me how?

In plowing a church parking lot - used 80 lbs of sand, 2 employees' 1 hour time for shoveling pathways plus payroll taxes, 1/4 gallon diesel fuel for truck, 1/4 quart of oil for engine.

Do you think a client can specifically allocate this items exactly - pick the cost exactly out of operating expenses in order to put the total on K-1 for 1040?

Anyone with just an inkling of cost accounting can do so. And i'm sure we all have
fond memories of Cost, right? grin

[JohnH]

I enjoyed cost accounting (didn't they change the name to "management accounting" somewhere along the way?) In a manufacturing environment, it's the only accounting function which has any practical value - much more useful than just keeping score & tallying up the results after the fact.

[AuditorTurnedGood]

My cost accounting class

in college was the only one in which my 4.0 GPA, 1500 SAT, 35 ACT, now Big 4 audit manager of a roommate got anything less than an A, he got a C+ on the first exam. That did not bode well for the rest of us. I believe tears were involved. Lukcy for all of us, the professor had mercy and curved the class.

I agree though, it is a very important , and often overlooked, segment of our industry. I have 1 client that uses it.

[dsi]

When I took the class it was called Cost Accounting. Now they call it Managerial Accounting.

[oceanlovin'ea]

my second job

My second job way back when (late '60's) was for Kraft in cost accounting. I kept track of the packaging materials. Every month end, I knew how to do the report and find mistakes but I never understood it.
That is what my husband has done since the 1970's in one form or another. An interesting field. When he retires next year, he will become the house accountant and take over my bookkeeping clients. Yea!!

Linda

[ChEAr$]

Back when I was taking accounting courses, cost accounting was in no way similar to
or comparable to managerial accounting. Cost is pure allocation methods and useful to
those majoring in accounting, whereas so called managerial accounting courses were, and
should still be useful only to those finance types not majoring in accounting. Anyway,
I still have textbooks for both.

Laboring through cost is pure drudgery. but you ought to try teaching it to a bored
class! Not THAT is a challenge.

Been there; done that.