web sites created for tax write-off

This is probably a question pertaining more to American webmasters
then European webmasters. The only reason for that is I don't know how
tax laws work overseas.

My question is if you created a web site for a nonprofit or charitable
organization, what figure do you use on invoice? Here is a scenario
that I think would be interesting to think about. Let's say you spent
a week or two weeks designing a web site for this organization.
Normally let's say you would charge them $2000 or $3000 for the job.
But since they are not going to pay you anyway, so you create an
invoice for $10,000, $15000, $20,000 or even $30,000.

The organization or the people who are running the organization are so
happy to have a web site and not understanding what the true cost was,
they prepare tax form that you can use to write off this amount on
your yearly taxes. Such a write-off for couple weeks work would really
be worth it. I'm sure there are many who would be willing to donate
one week's work and be able to take a $30,000 write-off on their
taxes.

I tend to be a slow learner. I may be leading the cat out of the bag
as there may be some people who already have use this technique to
reduce their tax burden. I'm not suggesting anyone use this method to
reduce their taxes. At this point in my life I have been around the
block several times and had heard of where such a scenario was use but
in other industries, so I'm not inventing anything new.

I am just opening a thread about the subject. Maybe some of you have
use it or have heard of other people using it. Anyway I would like to
hear what other people know on the subject or their feelings about it.

"Bacchus" <bacchusREMOVE@wowmail.com> wrote in message
news:3vbq71pj428pnv1kj22bjnjicjo1d5c1ci@4ax.com
> This is probably a question pertaining more to American webmasters
> then European webmasters. The only reason for that is I don't know how
> tax laws work overseas.
>
> My question is if you created a web site for a nonprofit or charitable
> organization, what figure do you use on invoice? Here is a scenario
> that I think would be interesting to think about. Let's say you spent
> a week or two weeks designing a web site for this organization.
> Normally let's say you would charge them $2000 or $3000 for the job.
> But since they are not going to pay you anyway, so you create an
> invoice for $10,000, $15000, $20,000 or even $30,000.
>
> The organization or the people who are running the organization are so
> happy to have a web site and not understanding what the true cost was,
> they prepare tax form that you can use to write off this amount on
> your yearly taxes. Such a write-off for couple weeks work would really
> be worth it. I'm sure there are many who would be willing to donate
> one week's work and be able to take a $30,000 write-off on their
> taxes.
>
> I tend to be a slow learner. I may be leading the cat out of the bag
> as there may be some people who already have use this technique to
> reduce their tax burden. I'm not suggesting anyone use this method to
> reduce their taxes. At this point in my life I have been around the
> block several times and had heard of where such a scenario was use but
> in other industries, so I'm not inventing anything new.
>
> I am just opening a thread about the subject. Maybe some of you have
> use it or have heard of other people using it. Anyway I would like to
> hear what other people know on the subject or their feelings about it.

Some points you should consider:
As far as I know, the IRS doesn't allow you to write off the cost of any
donated labor or services.
Establishing the value of non-cash charitable contributions requires
some documentation, like an appraisal or proof of the sale of similar
items.
The IRS recently clamped down on car donations because people always
overvalued the cars.
Attempting to write off 30K for a web site is asking for trouble.
--
Red

"Ken" <ng3122@ke9nr.#nospam#.net.invalid> wrote in message
news:rskq711926197koom7ic9cum1pammc2msm@4ax.com
> Hi Red -
>
> On Sat, 07 May 2005 22:19:39 GMT, "Red E. Kilowatt"
> <kilowattREMOVE@aww-faq.org> wrote:
>
>> The IRS recently clamped down on car donations because people always
>> overvalued the cars.
>
> To clarifying, not that people were making up ridiculous numbers,

I'll bet some were. )

> but
> they were using book values (blue book? red book? I'm not a car
> aficionado). Now they can only claim what the charitable organization
> was actually able to sell the car for.

Indeed. And that's usually quite a bit less.
--
Red

On Sun, 08 May 2005 00:21:13 GMT, "Red E. Kilowatt"
<kilowattREMOVE@aww-faq.org> wrote:

>"Scott Bryce" <sbryce@scottbryce.com> wrote in message
>news:PZOdnbjDFstB0uDfRVn-pg@comcast.com
>> Red E. Kilowatt wrote:
>>
>>> As far as I know, the IRS doesn't allow you to write off the cost of
>>> any donated labor or services.
>>
>> I think they do.
>
>Not according to IRS Publication 526. Charitable contributions are only
>"money and property." The "value of your time or services" is not
>deductable.

Red is correct.

I'm on the Board of Directors of a non-profit organization. I donate
around 5 hours/week of technical help to them. Our treasurer, who is
a lawyer, told me most definitively that my donation is not
tax-deductible :-(

MGW

"MGW" <mgw1979@hotmail.com> wrote
> I'm on the Board of Directors of a non-profit organization. I donate
> around 5 hours/week of technical help to them. Our treasurer, who is
> a lawyer, told me most definitively that my donation is not
> tax-deductible :-(

What if you bill them at your regular rates, say, $100/hr for a total of
$500. Then, at the end of the month, make a $2,000 donation.

Would that work?

--HC

On Sun, 08 May 2005 01:56:28 GMT, "HC" <e01@removethis.toao.net>
wrote:

>"MGW" <mgw1979@hotmail.com> wrote
>> I'm on the Board of Directors of a non-profit organization. I donate
>> around 5 hours/week of technical help to them. Our treasurer, who is
>> a lawyer, told me most definitively that my donation is not
>> tax-deductible :-(
>
>What if you bill them at your regular rates, say, $100/hr for a total of
>$500. Then, at the end of the month, make a $2,000 donation.
>
>Would that work?

How would that help me?

HC wrote:
> "MGW" <mgw1979@hotmail.com> wrote
>
>>I'm on the Board of Directors of a non-profit organization. I donate
>>around 5 hours/week of technical help to them. Our treasurer, who is
>>a lawyer, told me most definitively that my donation is not
>>tax-deductible :-(
>
>
> What if you bill them at your regular rates, say, $100/hr for a total of
> $500. Then, at the end of the month, make a $2,000 donation.
>
> Would that work?
>
> --HC
>
>

Sure. You can deduct the $2000 you donated.

You can deduct donated tangibles - money, equipment, etc. But time and
labor is considered a zero cost item, and is not deductible.

--
==================
Remove the "x" from my email address
Jerry Stuckle
JDS Computer Training Corp.
jstucklex@attglobal.net
==================