Professional services in return for charitable donation. Business expense?

not true. It says if you provide services to one school, you cannot direct that school to make a charitable contribution elsewhere in lieu of your payment.

Reply to
Taxed and Spent
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gifts don't come with strings attached.

Reply to
Taxed and Spent

You can't assign income. And in the article that's what the recipient was trying to do. They specified that if the arrangements had been made in advance, it would have been approved. But after the fact it wasn't.

In OP's case no one is trying to assign income. OP made a payment to one person, in exchange for valuable consideration, that was paid to another person. Technically the person at whose behest the contribution was made, should recognize the income and the charitable contribution. But that has nothing to do with OP, or his question.

Reply to
Stuart O. Bronstein

Look back at the original question. Nobody directed anyone to do anything; the editor voluntarily offered a free service to people who gave money to the Red Cross. Had the editor reneged on the offer, taxpayer would have no recourse, but of course he'd still have the charitable deduction.

R's, John

Reply to
John Levine

I disagree. The donor is not making a gift out of the goodness of his heart. He is making a payment strictly for business purposes. It happens to go to a charity, but it is clearly and primarily for his business. Absent the business motivation the donation would not have been made. He didn't receive anything from the charity, but he did receive valuable consideration, so he doesn't get a charitable deduction.

Reply to
Stuart O. Bronstein

Sometimes they can and do. There are rules concerning whether or when a gift is "complete." It can be complete even if there are some strings attached, depending on the strings, of course.

Reply to
Stuart O. Bronstein

I would agree with you if the original intent was not a donation to charity but merely a way to facilitate buying a service for his trade. Then there would not be any donation but merely a business expense.

Reply to
Alan

OP stated PROOF of the donation was REQUIRED before the service was given.

Reply to
Taxed and Spent

Read it again. It says the payment could not be made to a charity (other than the school itself) even if the arrangement was made in advance.

Reply to
Taxed and Spent

No, that's exactly what it says. Paragraph #1 of that article says,

"Speakers can avoid the 'constructive receipt' of income issue if there is an agreement in place prior to the services being rendered, that services will be donated directly to the University in lieu of compensation.... However, if this request by the speaker occurs after the services have been provided, the speaker must report the fee as income."

Reply to
Stuart O. Bronstein

I agree. The outcome here depends on a facts and circumstances analysis of the taxpayer's actions (was it primarily charitable??? or primarily business-related???). There is no easy-to-grab bright line test. And, of course, if going in the business direction, the taxpayer (as always) must maintain adequate records to support his position. A disclosure on Form 8275 might be appropriate.

Reply to
MTW

How is this different from a parent who gives their child a gift to defray the downpayment on a new home? They're not directing the child to buy a home, they just promise that IF the child buys a home they'll give them a big gift.

Reply to
Barry Margolin

In the case of parents and children, the money is given out of disinterested generosity (the definition of a gift), even if they expect the child to do something for it. The parents are getting nothing in return other than the wellbeing of their children.

In OP's case, the donation was not out of disinterested generosity, but with the expectation of receiving something of value to him in return.

Reply to
Stuart O. Bronstein

I think you're getting confused about the parties. In the OP, the gift giver is the service provider offering the free service. They're not receiving anything of value in return, the Red Cross is.

The only person who might not be acting out of disinterested generosity is the client, who donates to the Red Cross with the expectation of receiving these free services. But the question above is whether the service provider *directed* them to donate to the Red Cross; if they made the offer after the donation, I don't think it can be construed that way.

Reply to
Barry Margolin

They don't have to receive anything of value. They only have to want something of value that is given to someone. If the transaction is taxable, who is responsible for the tax is an entirely different issue.

I agree. I was under the impression that the donation was made in response to the offer to provide a service that OP wanted, in exchange for the donation. But if the donation had been made first, then subsequent actions couldn't change that to be a business deduction.

Reply to
Stuart O. Bronstein

Is that right? wasn't the editor's announcement an offer, and the writer's donation an acceptance by fulfilling the conditions of the offer?

Seems like a contract to me (but I am not a lawyer).

Reply to
Stan Brown

It's not much of a contract if there's no recourse.

Writer: here's my receipt from the Red Cross and my 500 page manuscript

Editor: sorry, I changed my mind

It's not like he can ask the Red Cross for his money back.

R's, JOhn

Reply to
John Levine

Actually if the offer for services in exchange for a donation was made before the donation, it was a contract. Just because the person offering the service didn't receive the consideration doesn't change that. If he doesn't perform, then he (not the Red Cross) will be liable for damages.

Reply to
Stuart O. Bronstein

The editor said "If you donate a total of at least $X to one or more of the following charities [one was the Red Cross] and provide me with proof that you've donated at least $X to those charities, I will read your entire manuscript and send you a developmental edit letter and will spend an hour on the phone with you after you've had a chance to review the letter".

After seeing that offer made, the taxpayer made the donation and sent a copy of the donation receipt to the editor, and received the services.

Reply to
Rich Carreiro

first,

Thanks. That's known as a unilateral offer - if someone makes the requested donation in response, it creates a legally enforceable contract, and indicates that the donation was for business purposes rathern than eleemosynary.

Reply to
Stuart O. Bronstein

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