Recording non-cash donations [RESOLVED]

[Rich Shepard]

On Tue, 13 Feb 2018, Adrien Monteleone wrote:

> That was quick, you answered your own question with a recommendation from
> an accountant in 3 minutes. (at least by my clock)

Adrian,

   Well, it was actually longer than that when I came up with the solution
(and implemented it), and a couple of hours later met with my accountant.
The instant solution on the mail list was due to the question being delayed
in appearance on the list and my resolution appearing quickly. :-)

> I'm curious for a clarification.

   Sure.

> Does your accountant mean to expense the non-cash goods and services
> provided at once? Or to hold these as deferred and expense them as used?
> Or even to accept them as ‘revenue’ and later deduct them against matching
> expenses?
>
> Just curious. Overall, I think I see where she's going, I just want to
> understand the advice better.

   Good questions. My business has always been run on a cash basis, not
accrual. When I take a load to Goodwill, or a bunch of books to the library
for resale I now enter the values on the receipts in GnuCash.

   Where I am non-cash donations (goods and services, such as travel and
service time for pro bono assistance to a non-profit group) are deductible
from federal and state income taxes.

   Donating things and time so others can benefit from them can be considered
altruistic and represent good will for individuals and businesses. Last year
I changed my company's structure from Inc to LLC so the distiction between
personal and business is closer with the latter structure.

   To record these non-cash donations requires an expense account, and that
needs to be offset by an asset account. By using these new accounts when I
send her the annual P&L and balance sheet, along with PDF copies of each
month's bank statements for both business and personal accounts she has all
the information needed to prepare my tax returns. She's moving to do as much
paperless work as possible and it's easier for me to send PDF attachments to
an e-mail than drive two thick wads of paper to her office.

   Does this clarify things for you?

Regards,

Rich