Business Tax Strategy - Charitable Donations

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Donating to charity isn't just a good thing, it can even help your business' bottom line because they're tax deductable. Generally, in order to qualify for the deduction, donations must be to nonprofit groups of a religious, charitable, educational, scientific or literary nature, or groups that work to prevent cruelty to children or animals. Businesses can deduct any cash donated, or the fair market value of any property donated, after subtracting the value of any benefit received (such as admission to a banquet or performance). Records are of key importance to this tax strategy. So be sure to retain a detailed written receipt. What some savvy businesses know is that it can be a valuable tax strategy to donate appreciated property rather than cash. This is because you can deduct the fair market value of the appreciated property, rather than the amount you paid for it originally. In doing so, the business may avoid paying capital gains tax that may have otherwise been due on the appreciated property. As always with tax issues, the rules are quite complex, so consultation with a professional is highly recommended.

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