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DPChallenge Forums >> Business of Photography >> Is donating a photo tax deductible?
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11/15/2006 08:01:58 PM · #1
I am donating a photo (not a print) for use in a brochure for a non-profit organization. Is this tax deductible? Just curious as I am trying to keep track of everything this year.

Thanks :)
11/15/2006 08:07:20 PM · #2
yes.

Originally posted by IRS website:


Donations of stock or other property are usually valued at the fair market value of the property.


so deduct whatever you would have sold it to them for.
11/15/2006 08:10:23 PM · #3
Originally posted by muckpond:



so deduct whatever you would have sold it to them for.


Thanks!!!
11/15/2006 08:17:10 PM · #4
It'll be convenient if you can get the organization to give you some sort of reciept for the worth of the photo. Don't underestimate it's worth either.
11/15/2006 08:18:33 PM · #5
Originally posted by fotomann_forever:

Don't underestimate it's worth either.

Or overestimate it either ;)
11/15/2006 08:31:35 PM · #6
Originally posted by JRalston:

I am donating a photo (not a print) for use in a brochure for a non-profit organization. Is this tax deductible? Just curious as I am trying to keep track of everything this year.

Thanks :)


If this is a photo you produced, you can only deduct your actual costs in creating the photo -- not what you would sell it for.

~Terry
11/15/2006 08:33:04 PM · #7
I agree with Terry - Only at your cost for a tax deduction.
11/15/2006 08:35:28 PM · #8
Originally posted by ClubJuggle:

Originally posted by JRalston:

I am donating a photo (not a print) for use in a brochure for a non-profit organization. Is this tax deductible? Just curious as I am trying to keep track of everything this year.

Thanks :)


If this is a photo you produced, you can only deduct your actual costs in creating the photo -- not what you would sell it for.

~Terry


But, doesn't that also include time spent shooting and processing at a reasonable rate?
11/15/2006 08:37:06 PM · #9
Originally posted by fotomann_forever:

Originally posted by ClubJuggle:

Originally posted by JRalston:

I am donating a photo (not a print) for use in a brochure for a non-profit organization. Is this tax deductible? Just curious as I am trying to keep track of everything this year.

Thanks :)


If this is a photo you produced, you can only deduct your actual costs in creating the photo -- not what you would sell it for.

~Terry


But, doesn't that also include time spent shooting and processing at a reasonable rate?


No.

~Terry
11/15/2006 08:37:20 PM · #10
Originally posted by ClubJuggle:

Originally posted by JRalston:

I am donating a photo (not a print) for use in a brochure for a non-profit organization. Is this tax deductible? Just curious as I am trying to keep track of everything this year.

Thanks :)


If this is a photo you produced, you can only deduct your actual costs in creating the photo -- not what you would sell it for.

~Terry


How would I calculate such a thing?
11/15/2006 08:38:35 PM · #11
Wait, so all she can deduct is the cost of a CD? Oy!
11/15/2006 08:39:27 PM · #12
Only the cost of transferred materials.

So if you donated a print to a charity auction, you can deduct the cost of printing.

If you give them a digital file on CD, you can deduct the cost of the CD.
11/15/2006 08:41:04 PM · #13
Well, don't that just bite.
11/15/2006 08:42:19 PM · #14
Originally posted by Gordon:

Only the cost of transferred materials.

So if you donated a print to a charity auction, you can deduct the cost of printing.

If you give them a digital file on CD, you can deduct the cost of the CD.


Well, what if I emailed them the photo?
Then I could deduct the cost of internet, my computer, and the electricity to run the computer.

;o)
11/15/2006 08:43:51 PM · #15
I agree with Terry on this also.

Print shops like where I work run into this kind of problem as well, when they are asked to "donate printing" for a non-profit -- they really can't, since they are already deducting the costs of production as business expenses ... no fair (to the rest of us) to deduct the same thing twice.

No, if someone were to buy one of your prints at a gallery for $10,000, and donate it to a qualified non-profit, they could (probably) take a major deduction for that, but you can't. : (
11/15/2006 08:46:02 PM · #16
Originally posted by JRalston:

Originally posted by Gordon:

Only the cost of transferred materials.

So if you donated a print to a charity auction, you can deduct the cost of printing.

If you give them a digital file on CD, you can deduct the cost of the CD.


Well, what if I emailed them the photo?
Then I could deduct the cost of internet, my computer, and the electricity to run the computer.

;o)


You can, if you do that 100% of the time you use the computer - otherwise you'll have to work out what percentage of the total usage is for that purpose ;)

Same with business/personal use of equipment.
11/15/2006 08:46:04 PM · #17
Originally posted by Gordon:

Only the cost of transferred materials.

So if you donated a print to a charity auction, you can deduct the cost of printing.

If you give them a digital file on CD, you can deduct the cost of the CD.


Also, if she produced the photo specifically for them, she could also deduct any actual (hard) costs associated with producing the photograph. This would include mileage at the rate for mileage driven in service of charitable organizations, which is set by statute at 14¢/mile. This might also include the cost of admission to venues specifically for the purpose of creating the photograph, or, in most cases, materials purchased solely to produce the photograph.

~Terry
11/15/2006 08:46:45 PM · #18
To make this clear and show why it is so (only deducting cost of materials), suppose:

1. The non-profit *buys* the photo from you. You would owe income tax on
the price they paid less your cost.

2. You turn around and donate what they paid back to the non-profit. This is a deductable contribution.

So the non-profit has the photo at no cost, and your tax deduction is greater than your taxable income on this deal by your cost.

Thus when you donate your work, you can only deduct the cost of the materials.
11/15/2006 08:48:30 PM · #19
Originally posted by JRalston:

Well, what if I emailed them the photo?
Then I could deduct the cost of internet, my computer, and the electricity to run the computer.

;o)

Pro-rated, you could ... your computer is amortized (by the IRS) over a period of about 3 years (or 8,760 hours), so for a typical photo (allowing an exceedingly generous 2 hours to process and transmit your photo) you can deduct 1/4,380 of the cost of the computer ... or less than the cost of an 8x10 print.
11/15/2006 08:56:15 PM · #20
14 cents per mile huh - I didn't do the maths, but can any car run on this with the cost of fuel in your area :-) At least for business use it's 40-something.
11/15/2006 09:05:53 PM · #21
Originally posted by fotomann_forever:

Well, don't that just bite.


Well, not really. Think of a hypothetical situation where Bob and Sue are each asked to produce a photograph for their favorite charity:

Bob produces the photo and incurs actual expenses of $5. As a matter of principle, Bob does not give his photos away for free, but is happy to "trade checks" and donate his licensing fee back to the charity. He sends the photo off to the charity, along with a license to use the photo and an invoice for his licensing fee of $200. The charity pays the invoice, and Bob immediately cuts a check to the charity for a $200 donation, essentially donating back his licensing fee.

Sue produces a photo, and also incurs actual expenses of $5. She has no such concerns about giving her photo away for free, and sends the photo off to the charity, along with a license to use the photo. She provides the license free of charge.

In essence, Bob and Sue have both done the same thing -- they've each provided a photograph to the charity free of charge.

Now, let's look at what happens at tax time. To simplify this discussion, we'll assume that neither Bob nor Sue are subject to affected by the limitations on deductions for charitable donations.

Bob's situation is easy to understand. He'll need to report the $200 he received for the photograph as income, and can deduct the $5 cost of producing the photograph as a business expense. He can deduct the $200 donation he made as a charitable donation. The net effect of all this is to reduce Bob's taxable income by $5.

Sue's situation is what confuses many people. Many feel that she should be able to take a $200 deduction for the photo, representing its fair market value and/or the value of her time. If this were allowed, though, the effect would be to reduce Sue's taxable income by $200 -- meaning that she would be $195 ahead of Bob, even though she did the exact same thing. The correct tax treatment of Sue's situation, though, is to only allow deduction of the actual $5 expense as a charitable deduction, which reduces her taxable income by $5, just like Bob.

~Terry
11/15/2006 09:08:13 PM · #22
Originally posted by robs:

14 cents per mile huh - I didn't do the maths, but can any car run on this with the cost of fuel in your area :-) At least for business use it's 40-something.


That rate is set by statute, where the other rates are determined by the IRS and indexed to an energy-weighted inflation index.

ETA: Mine can, but I drive a Prius. :)

~Terry

Message edited by author 2006-11-15 21:08:46.
11/15/2006 09:13:50 PM · #23
As Terry stated, it's actually better to do this:

Sell them the photo - That means billing them and getting paid by them

Take the money and write a donation for the same amount that was billed.

Now, come tax time, you can deduct, not only the cost to produce the image as a business expense and also deduct the check you wrote as a charitable contribution.
11/15/2006 09:14:56 PM · #24
Originally posted by Spazmo99:

As Terry stated, it's actually better to do this:

Sell them the photo - That means billing them and getting paid by them

Take the money and write a donation for the same amount that was billed.

Now, come tax time, you can deduct, not only the cost to produce the image as a business expense and also deduct the check you wrote as a charitable contribution.


Nope -- what I said is it's really a wash -- you end up the same either way.

~Terry
11/15/2006 09:22:20 PM · #25
Originally posted by ClubJuggle:

Originally posted by Spazmo99:

As Terry stated, it's actually better to do this:

Sell them the photo - That means billing them and getting paid by them

Take the money and write a donation for the same amount that was billed.

Now, come tax time, you can deduct, not only the cost to produce the image as a business expense and also deduct the check you wrote as a charitable contribution.


Nope -- what I said is it's really a wash -- you end up the same either way.

~Terry


Financially, sure.

But since you sold a photo, that's gotta make you feel good.

Then, making the donation makes you feel even better.
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