J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Charitable Contributions Made by Your Business

Your business may contribute cash or property to various charities. In general, the amount of your charitable contribution is deductible, but there are certain limits and requirements that must be followed. Donations of your time and effort are not deductible.

Example

An attorney performs services for a charitable organization. She cannot deduct the value of her uncompensated legal services as a charitable contribution.

Charitable giving and other activities can be a business plus even if no deduction is allowed. For example, donating items for which no deduction is allowed (as explained later), such as a fully depreciated computer or cell phone, can still benefit a charity and the people it serves. While you cannot deduct the value of your time spent when serving on a board of a nonprofit organization (you can claim only a personal charitable contribution deduction for your out-of-pocket expenses), you not only serve a cause but also gain visibility and make important connections in your community that can benefit your business in the long run.

Unincorporated Businesses

Individuals can deduct charitable contributions only as itemized deductions. For example, if you are a partner and the partnership makes a charitable contribution, the contribution is passed through to you as a separately stated item and you then deduct it on your Schedule A as an itemized deduction. The same is true for members of LLCs and shareholders in ...