Tax write-off for companies that donate goods?

Question

If a company donates goods for services, can they use it as a tax write-off and at what percentage? Do you know the law # to refer to? The goods are for our troops, if this matters with determining which tax law applies. Thank you.

Answer 1

If the company is donating goods or (not "for") services to US Armed Forces, or to a charity that distributed the goods to the US Armed Forces, this is considered a charitable donation and is deductible.

If the company is giving goods to specific servicemen, this would not be a charitable donation.

IRS Publication 526 Charitable Contributions
http://www.irs.gov/pub/irs-pdf/p526.pdf

The value of the deduction would normally be the actual costs of the donation. See the following for details.

IRS Publication 561 Determining the Value of Donated Property
http://www.irs.gov/pub/irs-pdf/p561.pdf

Added later: Donations to the US Armed Services, if such donations are used solely for public purposes, are deductible.

Quote from Pub 526, "Organizations That Qualify To Receive Deductible Contributions":

"The United States or any state...or any of its subdivisions that perform substantial government functions."

Answer 2

The donations must be to a registered charity to be deductible. Only the actual cost of the goods is deductible. The actual out-of-pocket cost of any services provided is also deductible.

Answer 3

If you donate goods for services, that is barter. Both the donor and the receiver owe taxes.

The US military is not a charity. You do not get to deduct contributions.

Answer 4

The most appropriate site for your question –

http://www.legaltarget.com/tax_law.htm

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