SERVICE TIME DONATED TO CHARITY NOT DEDUCTIBLE

Hi, I read your blog entry that explains that service time donated to a charity is not deductible. What if there is an actual assignable value of the service time to the charity? For example, I am donating my services as an auction item for a charity auction; if somebody buys it for $600 from the charity, then I perform the service for the purchaser; can I deduct that $600 value as a donation to the charity? Or, if the IRS sees no “value” in the service being donated and sold, does the buyer of the auction item get the full $600 deduction as a cash donation to the charity? Thanks in advance.

Eagle

Nope, it doesn’t make a difference if you can value your services or not – the donation of personal services is never deductible as a charitable donation. The IRS will not allow you to assign a value to your time for the purposes of a donation.

The second part of your question feels like it should be related but the IRS doesn’t consider the two pieces together at all. It’s clear that the value of your services isn’t deductible as a donation. However, on the buyer’s side, a charitable donation is deductible only to the extent that the donation exceeds the value of any goods or services received in exchange. So when you donate to public television and get a tote bag in return? You can deduct the cost of your donation less the value of the tote bag. The same analysis applies to services. If you bid at auction for, say, $1000 and you “win” a personal training session worth $150, the value of your deduction is the price paid for the item ($1000) less the actual value of the item ($150) – in this case, $850. Most charitable organizations will do the math for you and document the value of your donation on their thank you letter.

But if you’re that personal trainer? You can’t deduct the $150. You can only deduct related out of pocket expenses.

Let me know if you have any other questions.

Larry Kopsa CPA