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Subject:
Can a registered charity issue tax receipts for donated computer time?
Category: Business and Money > Accounting Asked by: universityresource-ga List Price: $15.00 |
Posted:
29 Apr 2004 19:28 PDT
Expires: 29 May 2004 19:28 PDT Question ID: 338601 |
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Subject:
Re: Can a registered charity issue tax receipts for donated computer time?
Answered By: taxmama-ga on 02 May 2004 09:35 PDT Rated: |
Dear universityresource, Of course you may issue a receipt for the computer time. Put the number of hours received from that company on the receipt, not the value. If you need a value, you could use the amount it would have cost your organization if you had to pay for the time. However, can the company getting the receipt take a chartiable deduction for it? That's another question entirely. If they had to pay for the time, they have a deduction. If they paid for their computer connection by the hour, that would also be a deduction. If they did not pay for the time, there really isn't anything to deduct. Incidentally, if they were paying for all the time and the connection time, they're already picking it up as a business expense. So, it's already being deducted. They are better off leaving it as a business expense, because charitable deductions, for corporations, are limited to a percentage of their profits. Often, their profits are not high enough to allow for the deduction, so they need to carry it forward for a year or more. (Use it in future years.) If the companies are large enough to have accounting staff, they'll know what they may and may not deduct, in relationship to the contribution. It may also be possible that they want the receipt simply for their annual reports, to confirm their community involvement. All those examples in the comments below, of CPAs or lay people donating time miss the point entirely. If the CPA had wanted to take a deduction for his donated time, he'd first have to pick up, in income, the value of the time donated, as a sale. Then he would get to deduct it. The net effect would be -0-. That's why donated personal time is never a deduction. In general, you'll find more information about contributions in IRS Publication 526 http://www.irs.gov/publications/p526/index.html And they only address personal time and services, here, not CPU time. http://www.irs.gov/publications/p526/ar02.html#d0e1345 I hope this clears up some of the confusion. Best wishes Your TaxMama-ga search - experience - bookmarked link to IRS Publications http://www.irs.gov/publications/index.html P.S. If you're very adventuresome or curious, you can search for legal cases and precedents at Legal Bitstream http://www.legalbitstream.com/ |
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Subject:
Re: Can a registered charity issue tax receipts for donated computer time?
From: uofagrad-ga on 30 Apr 2004 09:19 PDT |
Nope, can issue them a charitable deduction. For someone to get a charitable deductions for services the services have to be perfessional in nature, i.e. somehting that requires specific training and that others can not do. Let me provide an example: you have a phone-a-thon and 100 people work for fours hours answering phones. Well those people dont get a charitable deduction for their time. Now consider you have a donor who is a CPA and does the tax work for the non-profit and then doesnt charge you guys for it. Well in this instance the person would get a charitable deduction. The ability to allow the chartiable deduction is not based upon need or nessissty. It is soley based upon the professional ability of the other person. So I dont think you computer people would qualify. |
Subject:
Re: Can a registered charity issue tax receipts for donated computer time?
From: universityresource-ga on 30 Apr 2004 11:26 PDT |
Let me give you an example to clarify the question: A member has a server (or PC of some kind) -that server operates for 4000 hours a year -the member donates 2000 hours of that server time to our registered charity and our system tracks every CPU hour of use precisely. The Member is not at the server, nor is his work or labor involved in any way. |
Subject:
Re: Can a registered charity issue tax receipts for donated computer time?
From: aht-ga on 01 May 2004 17:41 PDT |
universityresource-ga: I am providing you my opinion in the form of a comment, as this is really an issue that you should contact the IRS to discuss directly if you are interested in pursuing this course of action. The IRS does not discuss donating CPU time in particular in their publication 526: http://www.irs.gov/pub/irs-pdf/p526.pdf However, on pages 5-9, they do discuss what cannot be deducted. Included in this is the general topic of "value of time and services". There will of course be exceptions; specialized services which the charitable organization would have had to purchase, such as the CPA services mentioned in the comment above, might be acceptable as long as it is not regarded by the IRS as compensation for the income lost by the CPA while providing those services. In other words, the deduction is for the value of the services provided, NOT the income the CPA could have otherwise earned if he/she had not used the time for the charity instead. The CPU time that your members are donating to your organization most likely will not be regarded by the IRS as a real or tangible good, meaning that it does fall into the category of gift of service (which again generally is not deductible). Looking at pages 4-5 of the above publication, you will see additional guidelines in the section entitled "Out-of-Pocket Expenses in Giving Services". This section discusses that the only deductible expenses are those that are incurred ONLY because the individual provided services to a charitable organization. Unless a donor can demonstrate to the IRS that the expenses associated with running their PC or server during a specific period were incurred solely due to providing your organization with processing time, even that would be disallowed on their income tax returns. As for approaching this as a lease, you would need to demonstrate that your organization receives exclusive use of the computing equipment during the times and dates involved. While I am not familiar with your specific project, the many distributed computing projects that I and the PCs I control are involved in make use of 'idle time'; I retain full control over the availability of my PCs. Therefore, I would not be able to claim that I have leased the use of my PCs to those organizations, and there is really no way for those organizations to create such a verifiable system without requiring me to install software that effectively dictates when I can and cannot use my computers. Even then, the contract between the organization and myself would need to be very carefully vetted with the IRS to see if they will even approve such a gift of service as a one that for which a charitable donation receipt can be issued. Which leads to the ultimate source for your answer, which is the IRS itself. You can find the contact information for your local tax office here: http://www.irs.gov/localcontacts/index.html Only the IRS can tell you for certain whether a deduction is allowable. I hope this helps! If you feel that this has answered your question (to the extent that anyone outside of the IRS can answer it), please let me know so that I may post it as the formal Answer to help you close this question. Regards, aht-ga Google Answers Researcher |
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