Today TaxMama hears from K in the TaxQuips Forum, with a common kind of question. “I own a veterinary clinic that provides discounted services to certain non-profit rescue groups. I have well documented records showing the amount the services would cost at regular price and the discounts that were given. Is there a way to deduct the discounted amount from my business taxes as a donation?
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Dear K,
Possibly. If you do your accounting on an accrual basis, and you record all your gross sales, before the discount. Then you would record the higher total sales number, and take a contribution deduction for the discount.
Net effect?
You would not really get any tax benefit – you’re still paying taxes on your net sales.
If you keep books on a cash basis, you only report the income you receive. So, you never report the part of the sale that is a discount anyway.
Net effect? You’re still paying taxes on your net sales.
So, really, there is no tax benefit to you.
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However, there is undoubtedly an increase in clientele because more people learn of you through the charities you support.
Of course, there are probably certain degrees of personal satisfaction, getting to meet the animals and their friends.
And remember, you can find answers to all kinds of questions about donating your services, pets and other tax issues, free.
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Where? Where else? At www.TaxMama.com.
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