A quick question for those of you who donate rods to RFS, CFR, etc. Are there any regulatory (tax) issues to consider with rod donation?

Thanks,

John

To take a deduction the organization must be a 501 (c) 3 organization. In general, the amount you can deduct is limited to your out of pocket costs in building the rod, not the price for which you could have sold the item.

I always paid FET myself, based on the donated value.

On the raffle side, if your club or organization is going to be holding a raffle for a rod and you are going to different events also and selling tickets for that raffle be sure to check with the state and local police. Some state require a "permit" to sell raffle tickets. Permit fees are small. ie. 5-10 bucks.

I deduct Fair Market Value on the donation and pay the FET tax on all donations.

Ron Weber

Fair market value is not correct, you can only deduct the costs of the materials going into the rods and out of pocket expenses. Here is a link to a more detailed explanation.

[www.pgdc.com] Doesn't seem exactly fair does it, but that's the way the tax code is set up.



Edited 1 time(s). Last edit at 12/19/2011 02:59PM by Steve Schoene.

[www.irs.gov]

[www.irs.gov]

[www.irs.gov]

Take care
Roger

p.s.
Remember, if the organization is not a non-profit organization, you can not deduct the contribution to a raffle.

I couldn't figure out how to delete the entire message which was, almost, duplicate in the following post, so ignore this one.



Edited 1 time(s). Last edit at 12/20/2011 05:48PM by Steve Schoene.

Inventory
If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. You must remove the amount of your contribution deduction from your opening inventory. It is not part of the cost of goods sold.

If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Treat the inventory's cost as you would ordinarily treat it under your method of accounting. For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year.


The two paragraphs above are the relevant portions of the IRS material about how to value donations. The key is the value is the SMALLER of it's fair market value...or it's basis. The basis is your your cost, but does not include any profit margin and therefore is usually less than fair market value unless you have an item that you have marked down below cost to clear it out or because it was a second.