Cost or fair market value? It's out of the goodness of your heart.

Hi June,

Got a twist on the question re taking a donation for charitable services.

I get why time isn't deductible. However, I recently coded a website, created some training materials and did a training for a non-profit (getting just a fraction of my usual rate - and donating the rest).

Don't those things quality as Patents and Other Intellectual Property as per IRS Pub 526 w/ lists: Know How and Software? I'll be asking the IRS as well - but thought you'd like to mull on that. I'd be interested in your thoughts.

Thanks,
Max


Hi Max,

First let me direct those reading this to my posts expenses -- donated services or products .

And, on your question, nothing to mull. What you missed in Pub 526 in that same section is:
"If you donate a patent or other intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is less."

Fair market value means what you could sell something for. You do a chalk drawing of your house. Somebody wants to buy the drawing for $20.00. The drawing's fair market value is $20.00.

Basis is your cost. If you drew that picture on a piece of paper that cost 50 cents and you used 50 cents worth of chalk, then your cost basis is $1.00.

If you donated that drawing to a charity your deduction would be $1.00. Your cost.

Same applies to a website you designed or if you cut the grass for the local community center. You get to deduct only your cost.

Best,
June