Corporations receiving donations from individuals - tax advice?

Taxes General Forum - Tax professionals meeting place and answers to queries. (Moderated) 

Yahoo!   Google   Windows Live   del.icio.us   digg   Netscape

Subject Author Date Corporations receiving donations from individuals - tax advice? jmhennings@gmail.com 11-02-2009  Re: Corporations receiving donations from individu... Mark Bole 11-03-2009  Re: Corporations receiving donations from individu... Alan 11-03-2009
Posted by jmhennings@gmail.com on November 2, 2009, 10:49 am Please log in for more thread options Hi there, I'm volunteering with a social business and am trying to help them find out the legal issues surrounding donations from individuals. They are a for-profit corporation, so I know that any donations they receive are not tax-deductible for the donors. But I'm having trouble finding reliable information about how for-profit corporations should handle donations from individuals in terms of taxes, legal accountability, etc. Here are my specific questions: 1) How/where do corporations report donations from individuals on their taxes? (somewhere on form 1120?) 2) Where can I get more information about the legal restrictions surrounding the acceptance of donations by corporations (with regards to conflict of interest, etc.)? I've been trying to search within "Title 26: Internal Revenue" of the Code of Federal Regulations on this site: http://ecfr.gpoaccess.gov, but I'm having trouble finding the right section that will answer my questions. 3) How does the amount of the donation affect tax reporting (if at all)? 4) Are there legal limits about what a corporation can do with donations from individuals? (e.g., does it have to be for a specific project or can it just go into a general pot of funds?) Any help you can offer would be GREATLY appreciated! Also, if you can point me in the direction of specific tax documents that discuss donations to corporations (instead of to non-profits), I would be so thankful. Thank you! -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Mark Bole on November 3, 2009, 4:08 pm Please log in for more thread options jmhennings@gmail.com wrote: > Hi there, > > I'm volunteering with a social business and am trying to help them > find out the legal issues surrounding donations from individuals. They > are a for-profit corporation, so I know that any donations they > receive are not tax-deductible for the donors. But I'm having trouble > finding reliable information about how for-profit corporations should > handle donations from individuals in terms of taxes, legal > accountability, etc. Here are my specific questions: I don't know the answers to your questions, but have a suggestion: why don't you just contract with the corporation to provide certain services for a nominal amount, say $1? This wouldn't trigger any self-employment tax for you, and the transaction would be recorded in the company's books for audit purposes. (It sounds too simple, so I wouldn't be surprised if there's something wrong with it...) I assumed you were asking about donating *your* services to the corporation. As to others who may wish to throw cash at them, again why not just sell something of nominal value for the cash amount? What I don't think a for-profit corporation can do is somehow declare that some of its regular gross income is excluded from taxation. Maybe instead a trust could be set up to receive cash donations, and the corporation could be the trustee? As Dick the moderator likes to say, "I never was a lawyer." -Mark Bole -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on November 3, 2009, 4:48 pm Please log in for more thread options jmhennings@gmail.com wrote: > Hi there, > > I'm volunteering with a social business and am trying to help them > find out the legal issues surrounding donations from individuals. They > are a for-profit corporation, so I know that any donations they > receive are not tax-deductible for the donors. But I'm having trouble > finding reliable information about how for-profit corporations should > handle donations from individuals in terms of taxes, legal > accountability, etc. Here are my specific questions: > > 1) How/where do corporations report donations from individuals on > their taxes? (somewhere on form 1120?) > > 2) Where can I get more information about the legal restrictions > surrounding the acceptance of donations by corporations (with regards > to conflict of interest, etc.)? I've been trying to search within > "Title 26: Internal Revenue" of the Code of Federal Regulations on > this site: http://ecfr.gpoaccess.gov, but I'm having trouble finding > the right section that will answer my questions. > > 3) How does the amount of the donation affect tax reporting (if at > all)? > > 4) Are there legal limits about what a corporation can do with > donations from individuals? (e.g., does it have to be for a specific > project or can it just go into a general pot of funds?) > > Any help you can offer would be GREATLY appreciated! Also, if you can > point me in the direction of specific tax documents that discuss > donations to corporations (instead of to non-profits), I would be so > thankful. > > Thank you! > Most intermediate and advanced accounting texts will tell you that donations of property and cash get reported as Other Income. Other Income is on Line 10 of the 1120. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted When are donations not taxable to the receiving party? February 7, 2008, 5:38 pm Corporations That Distribute All Income As Dividends August 23, 2008, 10:47 pm Limitations on NOL Carryforwards Applied to Acquiring Corporations October 23, 2008, 9:57 pm Facts on how Stimulus Plan will affect most individuals February 18, 2009, 9:56 am Economic Stimulus Eligibility for individuals claimed as dependent June 4, 2008, 3:45 pm TaxACT and Yellow Alert on Form 6251 AMT-Individuals, Line 17 March 20, 2008, 3:06 pm Receiving bill for underpayment penalty? April 15, 2008, 4:24 pm Charitible Deductions from the RECEIVING organizations point of view? July 5, 2008, 9:51 am Amending 2007 taxes -- can I file before receiving 1099R-correction? November 29, 2007, 8:04 pm Re: Filing 2007 1040X after receiving tax refund and paying additional taxes October 5, 2009, 3:13 pm