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how to record an S Corporation who donates a by product it makes to a charitable organization

mattcanova
Level 1
 
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3 Replies 3
qbteachmt
Level 15

The costs of materials and labor (basis) are already documented as business expense. What they did is forfeit the sale. It's the same concept as waste or damage, really. You don't get to write off the lost sales price as if that is donation.

Food donation has some new provisions.

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IRonMaN
Level 15

But to be technically correct, those costs should be moved from cost of goods sold to donations.  Which means if the shareholders don't itemize, they may have generated a nondeductible expense for themselves.


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qbteachmt
Level 15

"they may have generated a nondeductible expense for themselves."

Which is why I tell my clients to manage things as Promotional giveaways, and not charity.

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