Deduction For Charitable Probono Work.

[Dean Adams]

I am doing a free appraisal for a local community park - a fairly large park with multiple buildings, pavilions, sports fields and swimming pools worth $2 million plus. I agreed to provide the appraisal as a charitable donation to the park for a government grant they are procuring.

Based on the hours I will spend on the assignment, I would have charged a fee of about $4,000 to a bank or other client. How do all of you handle such "gratis" or "probono" assignments for charitable institutions such as churches, parks, etc. on your tax returns? How much can I deduct as a charitable deduction and how do I have to handle the details?

 

[Carnivore]

Maybe the tax law has changed but the last I heard was YOU CANT deduct it as a charitable donation.

 

[Randy Beigh]

Dean

Just checked with my accountant as I have been doing Habitat for Humanity work, free, since 1991. I have never been able to deduct it. She said IRS does not see providing a service as deductible since there is no cost basis.

Don't know what it all means, other than when you pro bono, it really is free.

 

[Dan Leggett]

Charge your regular fee and, after you're paid, write them a check.

 

[Stone]

Charge your regular fee and, after you're paid, write them a check.

Really good idea. I hadn't thought of that one. It reall sucks that the IRS makes it so that you have to find a dodge for these kind of things. They wonder why people break the law.

 

[Mountain Man]

Iv'e done what Dan has suggested before. That's a good idea if they can and are willing. The only problem I have run into before is that the agency has to go through a mountain of paper work, called board meetings, re-visit their buget to include additional expense/income (although it's really just a book keeping thing) it makes for a big headache.

But ask, it would be much better than working for free with no deduciton.

 

[Mountain Man]

How much can I deduct as a charitable deduction

Nothing, IRS does not allow donated "time" deductions. You actually have to give something of value with a basis recognized in the market. IE: charge them the fee, get the check, and write a donation check back for a cash donation letter.

 

[Pat Butler]

"Charge your regular fee and, after you're paid, write them a check. "

You would have to report the income, then the expense. Everything would wash out and you wouldn't benefit from the deduction. If you have any employees then their expense is essentially deductible as are any hard costs.


It's similar to people who spend money "because they need a deduction." Until the tax rate exceeds 100%, you are only losing money by spending a dollar in order to save 28 cents or so.

 

[Dean Adams]

Originally posted by Dan Leggett@May 12 2003, 07:56 PM
Charge your regular fee and, after you're paid, write them a check.

If I charge a fee and then write them a check for the same amount, it's a wash. I have to report the income and then deduct the same amount as a donation. There is no benefit, just more paperwork for all involved.

I guess I just have to face the fact that I really get no write-off, even though I've donated something of value. If I spent 40 hours building a table and donated that to the park, I'd be able to write off the value of the table, right? But I spent 40 hours completing an appraisal and I can't donate anything except the cost of the paper and ink, which I write off as a normal business expense.

 

[Dean Adams]

Originally posted by M Leggett@May 12 2003, 10:11 PM

How much can I deduct as a charitable deduction

Nothing, IRS does not allow donated "time" deductions. You actually have to give something of value with a basis recognized in the market. IE: charge them the fee, get the check, and write a donation check back for a cash donation letter.

I'm not trying to deduct my "time". I'm trying to deduct the fair market value of my professional appraisal services, based on what I charge for similar assignments.

There is no point in charging the park my fee and then donating the same amount back to them. That would have no benefit to either of us.

I appreciate you taking the time to help. I'm just having a bit of trouble understanding the IRS rule and how it is or isn't fair.