Deduction - what have you been told?

[Stella Starr]

I just met with my accountant and he told me that discounts and donations of gift certificates are not tax deductible. Donations only count if you are making one after you have made the income.  Writing a check to the charity would count, but donating a gift certificate would not.  I thought that this would be considered an advertising expense.  :-/  He said that it is not since you are not actually making the income.  You are not paying tax on the money.  You are deducting it right off the top.I know that we sometimes hear differing opinions so, What have you all been told?

 

[chris m]

Deduction - what have you been told?

 Your accountant is correct, but if the donation could help your business, then it can be considered advertising.  For example,  I donated $50 to a local radio station I enjoy listening to and the radio station anounced the name of all donors over the radio.  Donating the money helped with advertising.    Gift certificates are the same, if you donate a gift certificate and it generates business you can deduct as advertising.

 

[Debi]

 My tax preparer allows me to deduct gift certificates I have donated to charities if the person comes in to use them.  She puts it as an advertising expense.

 

[Kass86]

Deduction - what have you been told?

Time is money....time is money....time is money....time is money....

 

[Bozema]

Deduction - what have you been told?

Time is money....time is money....time is money....time is money....

- Not if you're the IRS

 

[vis]

Thanks everyone!Guess I was hoping to hear different. I am starting to understand why CashBack and rebates have gotten so popular with the large companies.  

 

[Curious22]

Cross reference post which has some info about tax deductions:

Would you raffle a free massage?
http://www.massageplanet.com/forum/viewtopic.php?t=1152

 

[Pompal 09.]

Giveaways are a wash. You can claim them as an expence, but you can be sure your accountant is counting it as income first. You cant take something away from nothing. They may help to make it look like you made more on a line of your income tax, but in reality, they get evened out. I dont even bother keep track of donated gift certificates for tax purposes. I give out fewer than I did in the past tho. I also short date them, usually only 3 months expiration and I am sure to write on the certificate that it was a donated certificate. Then, when the certificate comes back 3 years after I donatated it, I can tell them tough luck, no money was recieved for that certificate. Of course, if the certificate is being sold in some type of auction, I dont do that.

Ladeeda