[GNC] Non-cash charity contributions

[Stan Brown]

On 2019-11-24 12:58, Art Chimes wrote:
> In the US at least, many donations of stuff — other than money — to 
> charities is tax-deductible. ...> My question is, how best to record these in Gnucash.
>
> I have an expense account called "charity:non-cash contributions"
> where I record these (potentally tax-deductible) donations, but I
> don't know how best to record the other side of the transaction.
> 
> As a placeholder, I am using "Orphan-USD" as the source. Is there a
> better way.

I should say so! "Orphan" isn't meant to be a permanent repository of
any transactions, as far as I'm aware.

> Note: I do not want to be tracking the purchase cost of every item I 
> donate, and don't want to muck about in the pond of depreciation
> either. 

Good news! Your purchase price is irrelevant, and depreciation is
irrelevant, so you have no need to keep track of either. The US IRS says:

"you generally can deduct the fair market value of any other property
you donate to qualified organizations"
Source: https://www.irs.gov/taxtopics/tc506

Note: fair market value. Not cost, not cost net of depreciation. Fair
market value. (There's one caveat, on the same web page: "Special rules
apply to donations of certain types of property such as automobiles,
inventory and investments that have appreciated in value. For more
information, refer to Publication 526, Charitable Contributions." But
your examples don't sound like these types of things.)

The problem, of course, is how to determine fair market value without
selling the goods. The recipients will almost certainly not give you a
valuation, just a receipt for items, so finding FMV is your problem not
theirs.

If you're donating books to a library book sale, one way to determine
FMV would be to ask what they sell books for -- most likely either per
volume, per pound, or per bag. Whichever it is, it will be a tiny
fraction of what you paid for the books or what bookstores are charging
now. Assuming your canned goods are not near their expiration, not
dented or rusty or otherwise unsalable, their FMV is what grocery stores
are currently charging.  Similarly for hard goods like plumbing
supplies, though you should probably make a reduction if they're not in
their original packaging, especially if they have been used at all.

The usual caveats: I am not a tax professional, and you should check
this out yourself rather than relying on what I tell you.

As for how to account for these donations, I think Kevin Reid's answer
is a good one, and it's what I do:
> you could record them as negative expenses — if you donate, say,
> food, record them against your expense account for food. This ...
> seems reasonable to me because the sum of your expense account will
> then more closely track the amount of food you purchased for your own
> use, excluding the donated food.

-- 
Regards,
Stan Brown
Tompkins County, New York, USA
https://BrownMath.com
http://OakRoadSystems.com