I have a small business. I have an office in my apartment, my only office. In order to set this office up, I had to give away stuff, property and make space for the office. I had no time to sell property, so I gave it to the Salvation Army (and got receipts). Can I deduct the loss? If I would have not opened the business, I would not given the property away. Please advice.
Kindly Ette
No one forced you to give the stuff away. You could have rented a storage room and saved it. The only deduction you can take is a charitable contribution on Schedule A for the fair market value of the stuff you gave to the Salvation Army. If the value was over $500, you will also have to file a special form itemizing your donations. If any one item was worth more than $5,000, you would need an appraisal in order to deduct it.
The property you gave away is a charitable contribution, not a loss, so it would be reported as an itemized deduction on Schedule A line 16. As for your receipts for the property you donated, it must meet the substantiation requirements, ie, Name of charitable organization, date of contribution, etc. See pages A-4 and A-5 in the Form 1040 Instructions booklet for more info. Depending on the amount of your total itemized deductions on Schedule A line 28, you might be better off taking the standard deduction amount for your filing status. Rudy
Disclaimer: The posted answer is for educational purposes only and Lizcano Tax Services, LLC and/or Rodolfo Lizcano have not been engaged to render any tax, accounting, legal, or other professional services.
You can deduct the FMV of what you gave to the salvation army on schedule A.
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