Using Misha as an example, he donates his services at a value of $500.00. The auction winner ends up securing $800.00 of his total services and as such pays Misha $300.00. Misha books $300.00 towards his annual Revenue and books ZERO on his Schedule A, Itemized Deductions for Charitable Donations.

In order for Misha to wind up with a $500.00 charitable donation, he’d first have to receive $800.00 in this example and then make a donation of $500.00 (cash, check or credit card) to the school. By this, now he books $800.00 towards his annual business Revenue and has a $500.00 Schedule A Deduction.

Bottom line is that Services donated can NOT be valued at what you’d normally get. In these instances, only out of pocket expenses wind up as Charitable Donations.

My background in Taxation (MBA-Taxation) spans 32 years of service primarily concentrating on the Self Employed person. I do serve small corporations (Both Sub Chapter C & Sub Chapter S), partnerships, LLCs, LLPs and trusts. I am licensed in California with reciprocity to all the other States and am a member of the California Society of CPAs. I subscribe to numerous tax resources to keep up to date with the ever present changes in Tax Law and readily share law changes when they impact clients. I have and will continue to represent clients in IRS Audits or other tax difficulties that occur.