Is the donation of bandwidth considered a service or a good? 
Or...more to the point, is donation to a 501(c)(3) organizat of
bandwidth by a bandwidth provider tax deductible for that
organization?  Please explain and offer suggestions to reach the obvious goal...

---

Request for Question Clarification by denco-ga on 20 Jul 2005 14:43 PDT

Howdy barchibald-ga,

A reminder of the "Important Disclaimer: Answers and comments provided on
Google Answers are general information, and are not intended to substitute
for informed professional medical, psychiatric, psychological, tax, legal,
investment, accounting, or other professional advice."

According to this Internal Revenue Service (IRS) document, it does not
appear that the donation, as it is not money or property, would be tax
deductible.

"IRS Publication 526 ... Charitable Contributions."
http://www.irs.gov/pub/irs-pdf/p526.pdf

"Not Deductible As Charitable Contributions
...
Value of your time or services"

That said, this Howland Tax Services web page has an explanation of the
"whys" and a possible way around the problem.

Please note that the following refers to both the Canadian and U.S. tax
systems.

"Are Donated Services Tax Deductible?"
http://www.howlandtax.com/articles/donate.htm

"Neither tax department recognizes donations of time and effort as being
the same thing as donations of property or cash. Their logic appears to be
that cash donations are made with after-tax dollars while time and effort
are not.
...
You can agree with the charity that you will bill it for your services, and
then give a cheque back as a charitable contribution. This little manoeuvre
satisfies the requirement that your donation be made with after-tax dollars,
but you will be obligated to include the cash on your tax return as employment
or business income."

Would the above suffice as an answer to your question?  Thanks!

Looking Forward, denco-ga - Google Answers Researcher

---

Request for Question Clarification by pafalafa-ga on 20 Jul 2005 19:38 PDT

Just to add my two cents, I don't see anything in IRS publications
that would prevent you from treating bandwidth as "property".  It may
seem a stretch, but it's defrinitely a marketable commodity, and it
should be pretty straightforward to establish a fair market value for
the contribution, just as one would for other donations of property.

Denco-ga's comment presumed that bandwidth is not property, and would
therefor be a 'service'.  However, the meaning of providing a personal
(non-deductible) service generally refers to putting in your own time
and effort -- donating blood, for instance, or typing up the
organization newsletter -- and it doesn't seem to me that it's meant
to cover a commercial item like bandwidth.

Like I said...just my two cents.


pafalafa-ga

I used to run an ISP, and donated bandwidth, etc. to several nonprofit
organizations.  At the time, I called the IRS about just this subject,
and they indicated that "property" is something "real," in other words,
something physical.  As the "S" in ISP means "service," it is, however
inequitable, understandable that the IRS would take that stance.

Granted, IRS advice is not always dependable, but services are services,
and services are not property.

Looking Forward, denco-ga - Google Answers Researcher