buddyboy[at]idcomm.com writes:

- quote -

As I hope you've figured out by now, you can't. You're
starting to get creative, and that can lead you to fraud
before God gets the news.

Accept the fact that you're not able to do what you intended
and move on.

Phil Marti
Clarksburg, MD

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buddyboy[at]idcomm.com wrote:

- quote -

I just don't see how you missed a similar thread above. We
sure did it justice.

In short, doesn't matter what you "intend". If you sell a
product and make a profit, you pay the taxes, income AND
social security taxes.

Then you may donate any money you want to and take a tax
deduction for it if you use schedule a.

ChEAr$,
Harlan Lunsford, EA n LA
Fri 21 Jan 2005

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buddyboy[at]idcomm.com writes:

- quote -

[snip]

- quote -

You can't, as many people have already told you.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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buddyboy[at]idcomm.com wrote:

- quote -

I'm not sue about zero effect, but....
This is a not for profit activity. It does not go on a
Schedule C. Your income goes on Line 21 of the 1040, Other
Income. If you itemize deductions, you can deduct your out
of pocket expenses on the appropriate Schedule A line items.
You will probably have an amount that feeds the
Miscellaneous Itemized Deduction line for production of
income. This amount is subject to the 2% of AGI limitation.
Therefore, you may not be able to deduct all your expenses.
Any amount you give to charity would be deductible on the
Schedule A (2004 if for Tsunami relief and paid in Jan. '05
and you elect to deduct it in 2004). There are limitations
to the amount of charitable deductions to certain
organizations. Typically, this is 50% of AGI. Any excess
would carry over.

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<buddyboy[at]idcomm.com> wrote

- quote -

Unfortunately there will be tax consequences to you. You
and you wife will have income, and most likely
self-employment, tax to pay on your profits (the
contribution isn't a deduction, yet). Then claim the
charitable deduction on Schedule A.

- quote -

Donate the product to a charity, then you claim your costs
in the product as a charitable contribution. Let the
charity sell the product to raise the money.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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My wife and I want to do something to raise money for the
tsunami relief efforts. We want to produce something to
sell to raise money for this. We don't intend to keep any
money for ourselves. We estimate we would have gross sales
of 10,000, costs of about 3000, and donate 7000.

But I don't know how to report this next year, more
importantly what we need to do to prepare now to make sure
we don't have any tax consequence for us.

I've been searching for posts in this ng for a week or so
and have not seen this exact situation.

I know there is a schedule C for a business activity. But
one posting I read said the 7000 donation could not be put
on this, it had to be carried over as income, pay
self-employement taxes on it, etc., and take deduction on
Schedule A. Two problems with this, we don't want to pay
self-employment taxes on money we never intended to make a
profit on, and also we don't have any itemized deductions so
we don't file Schedule A.

I thought about putting the 7000 on Sch C as a promotional
expense, since most people would probably not buy our
product if not for knowing that profits go to tsunami
relief. But I read a posting that it is not allowed, or a
"red flag", if a donation exceeds 20% of gross income, and
the 7000 would be far more than our gross income.

Also Sch C is for the intention of making a profit, and we
don't intend to profit. Or you could say we intended to
make a profit, to donate. ??? seems like just semantics

So, how do we do this, and prepare now, so there is zero effect to us?

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