4 ms·
Hm, IANAA but my understanding is if you sell a widget for $10, which costs $8 to produce, you have to pay taxes on the $2 profit. But if you present the optio
by jpk 4y ago
Hm, IANAA but my understanding is if you sell a widget for $10, which costs $8 to produce, you have to pay taxes on the $2 profit. But if you present the option to your customer to pay $10 + $1, knowing the extra dollar will go to a charity, it's still a $2 profit, but the extra dollar can be used as a deduction to reduce the business's total tax liability.
I guess what you're saying is the extra dollar is actually considered profit, and using it for a tax deduction it's a wash compared to just not collecting the extra dollar in the first place?
- UncleMeat 4y agoYour understanding is absolutely wrong. Businesses do not "use charitable giving as a deduction" in the way that individuals do. Profit is unchanged and there isn't some new "deduction" that saves a business from its tax burden.
- jpk 4y agoIf that's the case, then I'm confused about what line 19 on Form 1120 is for. The instructions read an awful lot like the deduction individuals can take. The limits are different (corps can typically only deduct up to 10% of taxable income), but the instructions specifically mention cash contributions to charities. https://www.irs.gov/forms-pubs/about-form-1120 https://www.irs.gov/forms-pubs/about-form-1120 Again, I'm not an accountant so I might be missing something, but it seems plain to me?