Another hidden tax break?

User Forum Topic
Submitted by moneymaker on October 8, 2014 - 11:01am

Seems like all the big companies like to brag about how much they give back to the community, I would rather they did than didn't. But isn't it another form of tax evasion when their customers essentially pay for it (with higher prices) and they get to write it off? Perhaps i'm just too cynical, but if there are any CPA's here with experience with large companies am I off target?

Submitted by all on October 8, 2014 - 12:16pm.

You could say the same for any deductible corporate expense.

Submitted by FlyerInHi on October 8, 2014 - 12:26pm.

It's better not to have an expense than a deduction for an expense. Your tax savings for the expense = deductible expense x tax rate.

Submitted by Hobie on October 8, 2014 - 1:12pm.

Huh??

Submitted by UCGal on October 8, 2014 - 2:58pm.

Hobie wrote:
Huh??

Was that directed to Brian's comment or the OP?

Brian's point was a tax deduction requires an initial outflow of $ in the form of an expense or charitable contribution.

Lets say Company A makes a charitible contribution of $100.
Lets say their tax rate is 30%
They will owe $30 less in taxes - but had to outlay $100 to get that $30 - so it cost them net $70.

Now - if the OP is talking about those coin collections at the checkout - I've wondered about that for a while. Or the fundraising drives at Costco for Rady's Children's hospital... who get the deduction? If it's the corporation, that seems wrong if the customer is making the contribution.

Submitted by FlyerInHi on October 8, 2014 - 4:48pm.

UCGal wrote:

Now - if the OP is talking about those coin collections at the checkout - I've wondered about that for a while. Or the fundraising drives at Costco for Rady's Children's hospital... who get the deduction? If it's the corporation, that seems wrong if the customer is making the contribution.

Accounting wise, Costco would just debit cash and credit donations payable or an account like that. When they remit the money, the transaction would reverse itself. So I believe they just pass the donations through to the charity.

Or they could just deliver the coins directly to the charity. Nowadays, the stores just ask you if you want to make a donation and add the money to your bill.

Of course, the cost to administer the charity drive would be deductible.

Submitted by poorgradstudent on October 9, 2014 - 9:41am.

The worst is when companies get their employees to contribute money to charity and then claim it in their PR materials (or possibly taxes!!!). I'm actually a little suspicious of any cash-based donation program... pretty easy for the company to take that cash, roll it into their bottom line and then claim it as a deduction.

Submitted by poorgradstudent on October 9, 2014 - 9:43am.

FlyerInHi wrote:

Of course, the cost to administer the charity drive would be deductible.

And probably pretty fudgable. Estimating costs of any project is always tricky. Seems fairly trivial to round up at every opportunity... if the "true" cost is somewhere between 60-100 hours, why not just throw 100 hours on the balance sheet and call it a day?

Submitted by Doofrat on October 9, 2014 - 5:41pm.

Arghhh, I hate it when companies badger their employees for that crap. I worked at Sears way back and they were always badgering you to donate an amount of your salary to United Way. One guy I worked with gave me a great idea to donate 1 cent, his point was it would cost more for both Sears and United Way to process the penny than they'd get, so that's what I'd do. My manager could then check it off his list that he'd badgered his employee into "donating".

A couple of years later, it came out that the President of United Way was using the funds to fly on the Concorde and such.

The current president draws a salary of over $1,000,000.

Pretty much soured me on donating money to anybody.

F$%^ The United Way

Submitted by moneymaker on October 9, 2014 - 8:54pm.

I've often wondered if companies like Walmart or Costco use the info on how much is donated at their checkouts to gauge whether it is feasible to raise prices, in other words to directly measure their customers apparent discretionary income. Costco seems to be doing well lately which tells me they didn't really need to raise membership fees, but they did anyway.

Submitted by scaredyclassic on October 10, 2014 - 7:11am.

doofrat wrote:
Arghhh, I hate it when companies badger their employees for that crap. I worked at Sears way back and they were always badgering you to donate an amount of your salary to United Way. One guy I worked with gave me a great idea to donate 1 cent, his point was it would cost more for both Sears and United Way to process the penny than they'd get, so that's what I'd do. My manager could then check it off his list that he'd badgered his employee into "donating".

A couple of years later, it came out that the President of United Way was using the funds to fly on the Concorde and such.

The current president draws a salary of over $1,000,000.

Pretty much soured me on donating money to anybody.

F$%^ The United Way

i've been donating .25 a year to my alma mater s for about a decade. i have 2 reasons. while you're still paying student loans, schools shouldnt solicit you for substantial sums.

more important though, is that school rankings are based in part on percentage of alumni who donate money as some marker of satsifaction or loyalty or alum network. i once got a snarky leter back froma dean saying hey hat's up with the quarter.

i said, man, you should be mailing a quarter out to every alum with a Self addressed stamped envelope asking them to mail it back as a donation and explaining why. we could have top alum donation percentage.

ha.

huh.

costs me more to mail in my actual quearter than the donation.

Submitted by poorgradstudent on October 10, 2014 - 10:48am.

doofrat wrote:

Pretty much soured me on donating money to anybody.

F$%^ The United Way

There are some wonderful charities out there, and thanks to the internet age, it's pretty easy to research which charities get the biggest Bang for the Buck with donated dollars.

The United way is definitely too big and too bloated. I often prefer giving to local charities like the San Diego Food Bank or Humane Society.

Submitted by poorgradstudent on October 10, 2014 - 10:50am.

[quote=scaredyclassic]

i've been donating .25 a year to my alma mater s for about a decade. i have 2 reasons. while you're still paying student loans, schools shouldnt solicit you for substantial sums.

quote]

I refuse to give to my undergrad for this same reason. They talk about scholarship funds, I mention I still have student loans and would rather put my money in my own "scholarship fund".

I routinely tell both them and my graduate program "no, you can't have my current address" when they ask.

Submitted by FlyerInHi on October 10, 2014 - 5:04pm.

Sending a quarter to your alma mater is kinda lame.

If you want to be reflected in the stats of alumni donors, why not send them $25? The dean cared enough to write you.

You can donate online these days. The fundraising people don't look at the alumni rolls to single anyone out unless you donate more than nominal amounts. They just run a database query of alumni who have not donated x amount, and they focus on the incremental potential. Same thing salespeople do.

If you donate small amounts, you're likely lost in big data somewhere. But you still help out the ratings of your alma mater.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.