charitable deductions for business

[taxdude71]

I have a client that wants to run his donations through "marketing expense" because someone somewhere told him he could. I don't think so but I'll ask for other input. Business is sole-prop.

[ChEAr$]

I have a client that wants to run his donations through "marketing expense" because someone somewhere told him he could. I don't think so but I'll ask for other input. Business is sole-prop.

If it's a true donation/contribution to a recognized charity/church, of course it's not okay.

But do make a distinction between actual contributions out of the goodness of one's heart,
to those $25,50 or !00 amounts paid for advertisements in organiations' yearbooks, pamphlets, programs, etc. Now that is advertising.

[thomtax]

If it's a true donation/contribution to a recognized charity/church, of course it's not okay.

But do make a distinction between actual contributions out of the goodness of one's heart,
to those $25,50 or !00 amounts paid for advertisements in organiations' yearbooks, pamphlets, programs, etc. Now that is advertising.

I agree. They are purchasing an ad, whether it will be of any actual benefit to them or not. Heck, I'm not sure any of my newspaper ads actually do any good or not, not to mention yellow pages.

LT

[Lion]

Facts & Circumstances

The way your client told you -- No. However, if he's advertising in the Chamber of Commerce program or otherwise receiving publicity in exchange for his business monies, then he very well might have a marketing or advertising expense for his business instead of a charitable contribution. Facts and circumstances.

[taxdude71]

That's what I was always taught. Thanks

[taxea]

along with that unless he calls it gifts and takes no more than $25. per....it goes on Sch A.
If he pays it from business account then he should reimburse business out of personal funds.

[erchess]

Taxea

I completely agree that "business gifts" can only be deducted up to $25 per person per year. However in my neck of the woods churches and other charities especially theater groups often sell listings programs and in mailings. There is a specified cost for a given listing. There may or may not be different kinds of listings at different prices but there is always a specific usually written agreement that the business is paying a given fee for a particular listing. Thus it isn't at all similar to the case where someone makes a gift and then it gets acknowledged in some way that wasn't negotiated in advance. I've never handled the tax reporting of a charity but I would think that if reported at all this would be unrelated business taxable income to the charity. Would you have a problem deducting it as an advertising expense for a Sch C business?

[taxea]

is the listing just a list of donors or is it some kind of ad for the business. I look at it this way...if it doesnt qualify as an ad or a promotional item a business return, other than C Corp, the return creates a K-1 for the owners and donations go on the K-1 then are deducted on the Sch A of the individual return.
It stands to reason for me with a Sch C that if it doesn't qualify as a gift, advertising or promotional item it goes on the Sch A.