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Old 02-04-2014, 10:56 AM
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Charitable Contribution from Property Purchase

I am in Florida and want to purchase a commercial property for my business. The property is being sold is currently a beauty salon. The price of the property is a little high, but that is partially due to the owner selling it with all the contents (fixtures, chairs, sinks, etc.) A couple of questions:

1) If I purchase the property with all its contents can I donate the contents and deduct them?

2) If I purchase the property and the contents separately can I donate the contents and deduct them?

3) If I purchase the contents separately and sell them at a loss, can I deduct the loss?

Any help would be greatly appreciated.



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Old 02-04-2014, 01:34 PM
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Originally Posted by keifay View Post
1) If I purchase the property with all its contents can I donate the contents and deduct them?

2) If I purchase the property and the contents separately can I donate the contents and deduct them?

3) If I purchase the contents separately and sell them at a loss, can I deduct the loss?

Any help would be greatly appreciated.

#1;in general yes;however, it depends. You can claim a charitable equipment donation on your tax return to get a final benefit out of these items aslongas you itemize your deductions on Sch A ;if not, you can’t deduct them on your return. You need to keep receipts you receive for equipment donations that are worth less than $250. Each receipt must have an itemization of each piece of equipment as well as a total value to accompany your tax return. You can work with your favorite charities to get a copy of their sales documents for auctions or final sales to their constituents. You need these documents if the charity's original intention is to sell the contents, probably, because they indicate the claim amount you can use. Compare the charitable organization's tax status and history with the irs’s criteria for legitimate charities. You can only claim donations to a non-profit charity that is providing a public service for the community. Specific charities that are legitimate include animal-protection agencies and veterans groups.



#2;as mentioned above.

#3;yes;you need to repot it on form 4797; If you capitalized it and are depreciating it, you would take you sales proceeds minus your adjusted tax basis and calculate the gain or loss.if loss , it is ordinary loss . sale of business equipment is taxable income. Assume that Company X has a printer (business asset) which was bought at $200 and then sells the printer for $100 2 years later. $100 is taxable income as long as the company took the 179 deduction in the year you acquired it as its basis is $o; so $100-$0=$100 taxable ordinary income.

The IRC states,” A business usually has many assets. When sold, these assets must be classified as capital assets, depreciable property used in the business, real property used in the business, or property held for sale to customers, such as inventory or stock in trade. The gain or loss on each asset is figured separately. The sale of capital assets results in capital gain or loss. The sale of real property or depreciable property used in the business and held longer than 1 year results in gain or loss from a section 1231 transaction. The sale of inventory results in ordinary income or loss.



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