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donate software to it and get tax write-off? Donations are valued at your basis in them. Your basis in software you developed will generally be zero. Your ba

by patio11 11y ago

donate software to it and get tax write-off? Donations are valued at your basis in them. Your basis in software you developed will generally be zero. Your basis in paintings you painted is slightly higher than zero: the cost of paint. If you buy software or paintings, your basis the "the cost required to acquire them." So if you wanted to buy a major piece of software then donate it (subject to the usual requirements for this to not be abusive), then you'd be able to take the charitable deduction. In most cases, the people writing OSS work for corporations. Corporations have a very simple way to get tax benefits from supporting OSS work -- expense it. Done.

deleted 11y ago
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DenisM 11y ago
Indeed, as far as IP is concerned, the following rule governs. [...] your deduction for a donation of a patent or other intellectual property is its FMV, minus any gain you would have realized if you had sold the property at its FMV on the date of the gift. Generally, this means your deduction is the lesser of the property's FMV or its basis. For details, see Publication 526. [...] https://www.irs.gov/publications/p561/ar02.html https://www.irs.gov/publications/p561/ar02.html However it's not clear to me that the basis is zero for IP. Can you clarify with citations?
- hundt 11y ago
  From Publication 551, "Basis of Assets" "The basis of an intangible asset is usually the cost to buy or create it." They don't mention software specifically, but they say that for patents and copyrights you can only include costs you actually paid for, and you specifically may not include the value of your own time spent inventing or authoring. https://www.irs.gov/publications/p551/ar02.html#en_US_201412_publink1000256923 https://www.irs.gov/publications/p551/ar02.html#en_US_201412...
  - DenisM 11y ago
    Thanks a lot! I spent a bit of time, but didn't get to this.
hundt 11y ago
Although that appears to be true for software or paintings you create yourself (see discussion below), I don't think it's actually true for software or paintings that you bought. In those cases you would deduct the fair market value at the time of the donation (with some exceptions). This is actually a common tax loophole: you can donate appreciated stocks and get a write-off for the full value, without having to pay taxes on the gains.

by patio11 11y ago

deleted 11y ago

[deleted]

DenisM 11y ago

Indeed, as far as IP is concerned, the following rule governs. [...] your deduction for a donation of a patent or other intellectual property is its FMV, minus any gain you would have realized if you had sold the property at its FMV on the date of the gift. Generally, this means your deduction is the lesser of the property's FMV or its basis. For details, see Publication 526. [...] https://www.irs.gov/publications/p561/ar02.html https://www.irs.gov/publications/p561/ar02.html However it's not clear to me that the basis is zero for IP. Can you clarify with citations?

hundt 11y ago
From Publication 551, "Basis of Assets" "The basis of an intangible asset is usually the cost to buy or create it." They don't mention software specifically, but they say that for patents and copyrights you can only include costs you actually paid for, and you specifically may not include the value of your own time spent inventing or authoring. https://www.irs.gov/publications/p551/ar02.html#en_US_201412_publink1000256923 https://www.irs.gov/publications/p551/ar02.html#en_US_201412...
- DenisM 11y ago
  Thanks a lot! I spent a bit of time, but didn't get to this.

hundt 11y ago

Although that appears to be true for software or paintings you create yourself (see discussion below), I don't think it's actually true for software or paintings that you bought. In those cases you would deduct the fair market value at the time of the donation (with some exceptions). This is actually a common tax loophole: you can donate appreciated stocks and get a write-off for the full value, without having to pay taxes on the gains.