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Old 03-26-2014, 05:46 PM
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Donating Digital Goods - Deductions

I produce e-books and digital educational materials that I sell on various marketplaces. I donate some of those materials for various purposes as follows:

1) I donate some items when they are first released for promotion and advertising purposes.

2) I donate some to schools as charitable contributions.

My questions are:

Can I deduct my donations to promote my store as an advertising expense on Schedule C?

Can I deduct my donations to schools as a charitable contribution?

If so, do I just use a fair market value (what they sell for in my store) as the value amount in both cases?

Thank you very much in advance for any help.

Rick


Last edited by ricwhite : 03-26-2014 at 06:07 PM.


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Old 03-27-2014, 07:57 PM
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Quote:
Originally Posted by ricwhite View Post
My questions are:

#1;Can I deduct my donations to promote my store as an advertising expense on Schedule C?

#2;Can I deduct my donations to schools as a charitable contribution?

#3;If so, do I just use a fair market value (what they sell for in my store) as the value amount in both cases?

Thank you very much in advance for any help.

Rick
#1;no not on Sch C as ad exp; charitable donations are taken on Sch A of 1040 underneath the Gifts to Charity heading. Separate lines exist for claiming individual donations of less than $250 and for individual donations that exceed $250. Your total itemized deductions should exceed the amount the standard deduction for your charitable contributions to offset your taxable income. It is also important to note that your charitable contributions cannot exceed 50 percent of your AGI which may make reaching the level where itemized deductions out value the standard deduction more difficult. An example of this would be the donation of inventory to a Good Will Store with a value of at least $250. If you deduct the value of a piece of merchandise donated to a local charity as a promotional cost or "Other deduction" on your Sch C form, you cannot claim it as a charitable contribution on Sch A. Business donations should be expensed and removed from your inventory value properly on the Sch C while items or funds donated by the self-employed person from their business profits should follow the rules outlined above.
\
Note; The IRS allows you to deduct the dollar value of an actual cash donation or the fair market value of merchandise donated to eligible institutions on your income tax return. For you to claim a deduction, the recipient of your donation must be a registered tax-exempt organization under section 501(c)3 of the tax code.

#2;as long as it is legitimate charity 501c3

#3;as mentioned above.unless it is cash contribution, it needs to be FMV



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