Quick taxz question for small business

[Homerboy]

My wife runs a small business from the home (sole proprietorship)
If her business makes a charitable donation, this comes off our personal taxes on our Schedule A right? Not the business Schedule C?

On a side note, and maybe this should be a pre-question, the donation in question is as follows:

She does an art/craft show at a school/institute etc. Part of the "fee" for partaking in the show and being one of the vendors, besides a standard booth fee, a percentage of your sales for that show.

Example: The show she recently did, she had to pay the booth fee, but then on top of that, she had to return 15% of her gross sales to the school. This was just shy of $500.00

Thanks in advance.

 

[BoomerD]

(on page 43)

http://www.irs.gov/pub/irs-pdf/p535.pdf

Charitable contributions. Cash payments to You are disabled if you have either of the an organization, charitable or otherwise, may be your income. However, you may be able to take a special deduction. The deduction applies only following. deductible as business expenses if the payments are not charitable contributions or gifts.

Sole proprietors, partners The expense qualifies as a business expense in a partnership, or shareholders in an S corporation may be able to deduct charitable contributions made by their business on Schedule A.

Yes, the percentage paid for the booth should be qualified business expenses, not charitable contributions, and deductible on the Schedule C.

 

[Fern]

Assuming the arts & craft show was part of your wife's business, I'd say the booth fee (both fixed and the 15&#37 was a business expense and not a charitable contribution.

Fern

 

[kranky]

I think Fern's right. You can't call it a charitable contribution when you were required to pay it for participating in the event.

 

[Meghan54]

Example: The show she recently did, she had to pay the booth fee, but then on top of that, she had to return 15% of her gross sales to the school. This was just shy of $500.00

Thanks in advance.

Such is the way any store that leases its storefront space from a strip mall, shopping center, or "real" mall. They get a cut of your gross receipts.

Just wonder if the school is reporting said income they're receiving and how it's being reported......could make a difference.

 

[Homerboy]

I guess that makes sense as it's not a "Charitable Contribution" as in the voluntary kind. This was in essence a FEE for the booth space, just as the flat fee for this booth (and other shows) is. I'm guessing it makes more sense to record it as a normal business expense (I just have them tagged in Quicken as "Fees and Dues" and reported to the Schedule C) rather than a charity.

Makes senes now that I think about it more.

 

[EagleKeeper]

The school would not be reporting the income except to the school board. At that point it is treated as a donations to the government. similar to bake sales, raffles, etc

 

[Homerboy]

The school would not be reporting the income except to the school board. At that point it is treated as a donations to the government. similar to bake sales, raffles, etc

Hmmm... This is a VERY prominent local school. VERY rich. Private military school. This art/craft show alone likely raises them $100K+ I'm guessing so its not exactly "bake sale" level money.

 

[EagleKeeper]

Makes no difference what the amount is.

the school board is the one that would demand accountability of the funds income/outgo

 

[ZOOYUKA]

I would expense it also.

 

[Homerboy]

I would expense it also.

?!??

 

[ZOOYUKA]

?!??

Whats the question? I am agreeing with everyone else that it is not a charitable contribution. I would expense it all. You classify it as booth expense or you probably could even classify the 15% as a commission paid.

 

[GuitarDaddy]

Yes, it is a business expense to be deducted on schedule C. Better than a donation as it is not subject to the normal limitations of charitable contributions