Questions

Are in-kind donations are tax deductible?

How might a business receive a tax deduction on a in-kind donation to a 501c3 charity? How is the amount that can be deducted calculated? What are the legal requirements for a in-kind donation to be tax deductible?

2answers

Donations of in-kind services generally cannot be deducted.

Donations of in-kind items (clothes, food, computers, etc.) are deductible. But the amount of the deduction is basically up to the donor; they declare the market value of the items. This is obviously very subjective, but there are some large national nonprofits that publish list of suggested values. For example, the Salvation Army has a list here:
http://satruck.org/donation-value-guide

One note -- vehicle donations are treated differently. I believe that the deduction used to be the Blue Book value of the car; I believe that is now only the case if the car is used by the charity in their operations or donated by them directly to a person in need. Most charities that receive donated vehicles will sell them in an auction; in these cases, the amount of the deduction is limited to the amount that the charity receives for the vehicle (i.e. if the Blue Book value is $5,000 but the charity only sells it for $2,000, I believe the deduction is limited to $2,000).

NOTE: I am not an attorney and this is not legal advice. If you seek such advice, you should consult with a lawyer who specializes in this area. My response is based on my 13+ years of professional fundraising.


Answered 6 years ago

In-kind donations of tangible products are generally tax-deductible. For example, if a business wants to donate used computer equipment to a charitable cause, the business can contribute the property to the charity and take a tax deduction equal to the FMV of the property at the time of donation. There are special rules, however, if the property has depreciated or appreciated in value from when the company purchased the product. Definitely consult with a tax advisor before donating property and recording the charitable contributions on the business tax return.


Answered 9 days ago

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