Indeed, under certain circumstances, the cost can exceed your Gross Income from that Scd C.
BUT- would a tax deduction do you any good? I know a lot of people who don't itemize, thus their "100% tax deuctable" items won't help. In the case of a Sch C item, you don't have to itemize, but you do have to have some reasonable amount of Taxable Income, or else it doesn't help (at all or as much).
What they mean by "100% Tax deductable" is that when you BUY things- even from a Non-Profit- you are assumed to get FMV for the amount you pay- thus, since the amount of deduction is "Cost<FMV>= Deduction", you have 0 deduction. Girl Scout Cookies are like that. Those yummy little boxes of diet death are worth about what you pay for them- thus no tax deduction.
But calendars & such like are often given away free- and thus generally the IRS figures there is no FMV, thus the entire cost is deductable.
In the case of the computer, what they were talking abot is a Sec 179 expense option. You opt to "expense" rather than "depreciate" that item. There are many many rules on this, and the IRS loves to audit this issue. Thus- it is often a bad idea. Personally, I'd just take a 3 years depreciation and not worry
about the hassle. I'll bet someone was trying to sell you that computer and using that as a selling point. If so- ask them- "Will you represent me at my Audit? Are you an Enrolled Preparer?" :rolleyes. p The answer will not be "yes". dubious:
Do not buy stuff on the TAX advice of a salesman.
07-16-2004, 04:34 PM
They're usually things like calendars, notebooks, newsletters, subscriptions or other miscellaneous items that are somehow related to the non-profit organization in question. For instance, the Sierra Club calendar I bought is 100% tax deductible (it's technically a donation to the Sierra Club Foundation).I'd be cautious about this, and check with my accountant first.
In work I've done as Treasurer for several non-profit organizations, we have always been required to inform customers that they cannot deduce the entire amount of the contribution -- they must reduce it by the value of whatever tangible item/service they received. So if we have a dinner event at $150/plate, but the value of the dinner is figured as $20, per IRS regs, they can only count $130 as a deductible contribution.
Of course, on a calendar or similar low-price item, the difference is so small that the IRS is unlikely to ever come after that on an individuals tax return. But they might send the organization a nasty letter.