One of my C Corps left $8K on the table last year for Charitable Contributions that they couldn't deduct because they were over the 15% limit. At the time the president told me he hoped he could deduct it next year.
The president has become increasingly involved in more and more Chamber of Commerce activities, fundraising, charitable events, etc in the last several months. He has already spent more than in the previous year, with profits estimated to be less. Part of his public image pitch is to tell listeners how much his corporation is donating to charity.
The information above is presented so the reader can conceptualize what is going on. I'm now ready to pop the question.
He has (against my vehement objection) instructed his in-house accountant to open up a special labor account for charity "labor." When his people run out of something to do on their regular jobs, he has them do graphics for the high school, maintain computers for the hospital, etc. There will be at least $25,000 worth of charity "labor" charged to this account in addition to the cash contributions. This labor will be allocated with another 45% of fringes, meaning the books of account will show $36,000 in additional charity expense as a result of opening up this special labor account. Remember, his agenda is to publicize to various town fathers the maximum amount of charity.
Question: Can this $25,000 simply be deducted as "Labor" since it will be backed up with
W-2s, and the Fringes simply be reported as they were before allocation (payroll taxes, medical insurance, etc.)?? This is what would have happened if he had not drawn separate attention to the labor being spent on charity projects.
My objective (obviously) is to keep as much expense fully deductible without increasing the already over-limit charity amounts.
The president has become increasingly involved in more and more Chamber of Commerce activities, fundraising, charitable events, etc in the last several months. He has already spent more than in the previous year, with profits estimated to be less. Part of his public image pitch is to tell listeners how much his corporation is donating to charity.
The information above is presented so the reader can conceptualize what is going on. I'm now ready to pop the question.
He has (against my vehement objection) instructed his in-house accountant to open up a special labor account for charity "labor." When his people run out of something to do on their regular jobs, he has them do graphics for the high school, maintain computers for the hospital, etc. There will be at least $25,000 worth of charity "labor" charged to this account in addition to the cash contributions. This labor will be allocated with another 45% of fringes, meaning the books of account will show $36,000 in additional charity expense as a result of opening up this special labor account. Remember, his agenda is to publicize to various town fathers the maximum amount of charity.
Question: Can this $25,000 simply be deducted as "Labor" since it will be backed up with
W-2s, and the Fringes simply be reported as they were before allocation (payroll taxes, medical insurance, etc.)?? This is what would have happened if he had not drawn separate attention to the labor being spent on charity projects.
My objective (obviously) is to keep as much expense fully deductible without increasing the already over-limit charity amounts.
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