Can a small business deduct a service provided Gift-in-Kind to a public university? (Details Included)?

An allstar cheerleading gym in my city wants to donate tumbling coaching and use of their facility (which is a unique facility) to the university’s cheerleading squad for one hour per week. For one year (48 weeks) of this service, provided to twenty cheerleaders, the approximate value would be about $20,000.00. The company has agreed to provide this service free-of-charge, and the university is treating it as a "gift-in-kind". The university has said they will provide the company with a receipt, which (according to the university), the company can use as a tax deduction, since the university is a public university.

Is this true? Partially true? Completely false? Are there any deductions possible through this method?

It’s true.
Dont worry the Gym owner will have the Gym’s CPA take care of the whole thing.

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4 Responses to Can a small business deduct a service provided Gift-in-Kind to a public university? (Details Included)?

  1. Spock (rhp) says:

    the gym can only deduct its out of pocket costs, including allocations. The "value" is immaterial since there was no revenue involved.References : cpa

  2. jackiniraq says:

    It’s true.
    Dont worry the Gym owner will have the Gym’s CPA take care of the whole thing.

    ( _ /)
    (=’.’=)
    (”)_(”)References : ok, your gonna need clarification due to the first answer. Now I know we are talking about Fed taxes my knowledge is based on laws of my state, Texas.
    The Gym normally charges for use of its space. This being the case, allowing the University to use it’s space ‘Free of charge’ or if you prefer to clarify the terminology "on a donation basis" now you’ve changed the words and the taxable status. I do not know exactly what the "Gift in Kind" means or it’s relation to taxing. I do know that if you donate anything that you would normally charge for to an organization that is registered to accept donations, then an amount of money equal up to the value you would normally charge is deductable. (based on up to the amount listed on the reciept of course.)
    Like I said, the Gym’s CPA will handle it.

  3. botygy says:

    The gym will be deducting their cost of the facilities and coaches anyway, as these are on-going costs, whether they are compensated for services or not. That being said, then, the University should certainly send an acknowledgement and thanks, but as far as assigning a value, no. Contributions are limited to the lower of fair market value or basis, and the donor’s basis in this case is its costs. Said another way, the gym would not take a separate deduction.References :

  4. Randall Parker, MBA says:

    The gym can only deduct hard costs. They can pro-rate the amount of electricity used, payroll costs for supervision, etc.

    They cannot deduct the value of any rental for the facility or use of any items, as these are not hard costs.

    The gift-in-kind recognition by the university is simply a way of showing respect to the gym for its kind donation, but is not in any way related to a tax deduction.

    Most universities do have programs where businesses and others who donate a certain amount of money or make in-kind donations get special recognition and benefits. Keep in mind that special benefits (such as event tickets) received by the gym could be taxable to the gym, but free advertisement and promotion is neither taxable nor deductible.

    I hope this helps. Happy filing! Good luck!References : See profile for qualifications

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