Post by ccoyle78 on Nov 5, 2017 17:54:13 GMT -6
If you're doing a giveaway, you can do one of two things:
-->Remove it from Line 38 and put it under advertising expense (at cost of materials)
-->Just leave it on Line 38 and it is not there to count at the EOY count. It is then accounted for in the calculation in Part III.
To use it as an advertising expense you have to get a lot of exposure out of it and be able to prove it to report it as an advertising expense.
Donations to a charity are an owners draw and can not be put on a business return unless you are a C Corp. So you remove it from your inventory (and from Line 38) as an owner's draw and if it's an IRS recognized charitable organization, you can report the donation on your personal return (assuming you itemize deductions).
In all instances: the dollar value is the item's cost, not the retail selling price. So if you make a quilt and have $100 in materials but you would sell it for $500 because of all the time it takes, you can still only claim $100 on your schedule A.
And always, always, always get a receipt for your donation that shows the recipient is a registered 501(c) organization.
Keep in mind, if you withdraw something for personal use, the materials you purchased at wholesale without paying sales tax may now be subject to use tax.
Additional threads to review:
www.facebook.com/groups/WAHMtaxgroup/permalink/810715442335918/
www.facebook.com/groups/WAHMtaxgroup/permalink/795966727144123/
www.facebook.com/groups/WAHMtaxgroup/permalink/790683247672471/
www.facebook.com/groups/WAHMtaxgroup/permalink/891491427591652/
Mandatory "donations" to craft shows:
www.facebook.com/groups/WAHMtaxgroup/permalink/822531484487647/
www.facebook.com/groups/WAHMtaxgroup/permalink/871312079609587/
** This info provided for reference and as a general guide - tax laws do change - always have your books reviewed by a tax pro before filing! **
-->Remove it from Line 38 and put it under advertising expense (at cost of materials)
-->Just leave it on Line 38 and it is not there to count at the EOY count. It is then accounted for in the calculation in Part III.
To use it as an advertising expense you have to get a lot of exposure out of it and be able to prove it to report it as an advertising expense.
Donations to a charity are an owners draw and can not be put on a business return unless you are a C Corp. So you remove it from your inventory (and from Line 38) as an owner's draw and if it's an IRS recognized charitable organization, you can report the donation on your personal return (assuming you itemize deductions).
In all instances: the dollar value is the item's cost, not the retail selling price. So if you make a quilt and have $100 in materials but you would sell it for $500 because of all the time it takes, you can still only claim $100 on your schedule A.
And always, always, always get a receipt for your donation that shows the recipient is a registered 501(c) organization.
Keep in mind, if you withdraw something for personal use, the materials you purchased at wholesale without paying sales tax may now be subject to use tax.
Additional threads to review:
www.facebook.com/groups/WAHMtaxgroup/permalink/810715442335918/
www.facebook.com/groups/WAHMtaxgroup/permalink/795966727144123/
www.facebook.com/groups/WAHMtaxgroup/permalink/790683247672471/
www.facebook.com/groups/WAHMtaxgroup/permalink/891491427591652/
Mandatory "donations" to craft shows:
www.facebook.com/groups/WAHMtaxgroup/permalink/822531484487647/
www.facebook.com/groups/WAHMtaxgroup/permalink/871312079609587/
** This info provided for reference and as a general guide - tax laws do change - always have your books reviewed by a tax pro before filing! **