In-Kind donation

[JenMO]

Client has an in-kind donation contribution substantiation form from his church for doing work that they usually pay for. Where does this go on the sch A. Is there a form I need to fill out. Haven't had one of these before and now 3 days before the 15th!

[Jiggers]

In-Kind Donation

Client has an in-kind donation contribution substantiation form from his church for doing work that they usually pay for. Where does this go on the sch A. Is there a form I need to fill out. Haven't had one of these before and now 3 days before the 15th!

That means he was paid for work done?

If so, goes on his schedule C as income, subject to SE tax.

Then he can deduct it on Schedule A as an itemized deduction, assuming he can itemize.

What, he doesn't want to report the income? Bartering income!

Then no deduction on Schedule A.

Hope that helps.

[JohnH]

If he's not reporting any income for the work, he will have to accept the fact that he's foregoing any sort of tax deduction, potentially in exchange for eternal rewards for his services.

[glgillis]

There was a local church secretary who would give members statements for donated materials, supplies, and yes even labor, for whatever amount the members wanted. Some pretty outlandish figures. I knew her pretty well and told her that she wasn't earning any points with the Big Guy by helping people cheat on their taxes. Haven't seen any since.

These are the same people who can't understand why they can't deduct their own labor in maintaining their rental properties.

[JohnH]

Several years ago when I first came to my current church, I sat in on a meeting in which it was discussed that an architect was to be given a "Contribution Credit" letter for some gratis work he was doing in hopes of getting future business and for the tax deduction.

I didn't endear myself to anyone on the committee when I pointed out we could send a thank you note to him for his work but could not place a value on it because he didn't have a deduction for anything beyond his out of pocket costs. Things got worse when someone suggested that he might refuse to do the work unless we gave him the letter, because I replied if that was his motivation then we didn't need to be dealing with him.

In the end, we didn't put a value in the thank you letter and (surprise) he still continued to do the work - he finally got the job when the project got under way.

[JenMO]

This has been my thinking on this subject, but she was so confident that the church was giving her a statement (and they did) and she can deduct. I'll go back to her and tell her that actual expenses, mileage, paper, pencils, etc I can take off, but not the money they would have paid her and she would have had to pay taxes on. It only makes sense, but probably just to us tax preparers. WHat is a "in-kind donation"? Anything like that work as a charitable deduction?

[David1980]

If you're looking for something authoritative looking to show her print out IRS publication 526 page 6. Heck print the whole thing, it's only 23 pages.

Anyway on page 6 on the middle column it has a section "Contributions You Cannot Deduct". Listed within that section is "4. The value of your time or services,"

[Jiggers]

In-Kind Donation

This is like those that want to write off as a bad debt the uncollected rent on their rental property.

They can't do if they are on the cash basis.

[Burke]

Most people consider any income they don't receive as a loss. Well, it is a loss, but not a tax loss. Wouldn't it be great if we could do that? I usually use the analogy to explain this phenomenum, that they didn't win the lottery either, but they can't deduct that on their tax return.

[JohnH]

Try explaining to a restaurant owner why he can't take a tax deduction for food he prepares & then throws away because it isn't served. Mastering that little excercise makes all the other similar situations a breeze.