Re: [taxchat] Joint venture

Donna,

 

If all profits are donated, why report anything?  Net net there is no profit retained, no tax.  Its not a business.  Look at it this way.  Client spends X dollars out of pocket for a 501(C)(3) and gets reimbursed from the proceeds of sale of CDs.  There is no business incentive, there is no charitable deduction for clients"time".  It is a heart giving involvement in community and not a reportable or taxable event.  Would this approach stand an audit. Of course.

 

Arnie

 

 

----- Original Message -----

From: Donna J. Perrone

To: 'TaxTalk Listserv Members' ; taxchat@yahoogroups.com

Sent: 11/13/2008 9:54 AM

Subject: [taxchat] Joint venture

The music director/organist of our church is my client.  She joined forces with our 2 cantors, a husband and wife, to produce a CD with religious selections and other comforting music. They are donating all the profits to our parish.

 

This is basically a one time event. I am thinking about how this will be reported on my client's return this year. My first thought is that the income would be on line 21, the expenses on Sch A, subject to 2%, and the profits donated reported on Sch A as a charitable contribution.  Since the organist and her husband have a high AGI, they can very well lose the deduction for the expenses.

 

Any thoughts on this?

 

Donna Perrone

 

Donna J. Perrone, EA

East Haven, CT

203-469-4939

203-468-2038 fax

 

 

IRS Circular 230 Disclosure: Unless expressly stated otherwise, any tax advice contained herein, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (1) avoiding tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein.

 

Arnie Socol
President
Ways & Means, Inc.
845-562-6070

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IRS Circular 230 Disclosure: Unless expressly stated otherwise in this transmission, any tax advice contained herein, forwarded with or attached to this message was not and is not intended to be used, nor may it be relied upon or used, by any taxpayer for the purpose of (1) the avoidance of any tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions, or (2) promoting, marketing or recommending to another party any tax transaction or tax-related matters that may be addressed herein.

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