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HelpinMN

Member
State is MN

ok guys I do woodworking as a hobby but it gets quite expensive (I am still trying to hide the charge for a $500 router table from my wife that I just HAD to have). I am starting to make some pretty high end pieces. I do not want to turn this into an actual business yet because for me that ruins the fun if I am on deadlines and have to work on what other people want from me. What I am wondering is: is there a way to make a piece and donate it to some charity and write off more then my actual cost on it? For example if I make a humidor (my next big project) and it would normally retail for about $2500 but I may only have $300-400 in actual materials in it. How much would it be legal for me to write off? I am in a sales job so most of my pay is taxed as a bonus so if I even wrote off $1000 I would make back my costs on it, but I don't want to do something that is illegal or would get me audited.

Any ideas on how I can make this work?
 


LdiJ

Senior Member
State is MN

ok guys I do woodworking as a hobby but it gets quite expensive (I am still trying to hide the charge for a $500 router table from my wife that I just HAD to have). I am starting to make some pretty high end pieces. I do not want to turn this into an actual business yet because for me that ruins the fun if I am on deadlines and have to work on what other people want from me. What I am wondering is: is there a way to make a piece and donate it to some charity and write off more then my actual cost on it? For example if I make a humidor (my next big project) and it would normally retail for about $2500 but I may only have $300-400 in actual materials in it. How much would it be legal for me to write off? I am in a sales job so most of my pay is taxed as a bonus so if I even wrote off $1000 I would make back my costs on it, but I don't want to do something that is illegal or would get me audited.

Any ideas on how I can make this work?

My opinion is that you can only deduct, as a charitable donation, your actual cost of making the piece. Others may have a different opinon.
 

tranquility

Senior Member
The question is when is it a donation of services and when is it a donation of property. The two cases Kleinrock references are:


Grant v. Commissioner, 84 T.C. 809 (1985), where an attorney did some work for a charitable organization. He claimed he gifted not his time, but the documents created. He lost.

Goss v. Commissioner, 59 T.C. 594 (1973), where an economist donated two essays he created himself to a charitable orgainization and won the Fair Market Value of the essays.

I'd lean towards the latter than the former and give the FMV for the furniture.
 

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