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Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have a small S corp. I have created a brand ...

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I have a small "S" corp. I have created a brand with the express purpose of impacting the planet by donating 50% of all profits to initiatives created by me. My partner has a 501(C)3, which we planned to use for my "for profit" company to donate the money to. This si for people experiencing issues with the mortgage crisis, people being adversely affected by the economy. I expect my company with its marketing and product line to do very well. I do not wish to file for non-profit status. someone who calls herself the TaxMomma said I can only give 10% maximum to charity. Is this true? If ti's true, short of extablishing a non-profit or running this rpogram through my partners non-profit what can I do? It is a commerce project, and I do wish to retain some of the profits. She said the only other option is to take the money as income personally and be taxed on it. What should I do?
Submitted: 8 years ago.
Category: Tax
Expert:  Merlo replied 8 years ago.


Unfortunately, the information you received is true. An S Corporation is limited on charitable contributions to 10% of the taxable income.

Other than setting up your own 501(c)(3) non-profit program, the only other thing you can do is take the income from your S Corporation, and then make your donations out of your personal income. Generally, you can deduct cash contributions in full up to 50% of your personal adjusted gross income.

I know this was not probably the answer you were looking for, but those are the current IRS regulations.

If this was helpful, please press the Accept key. Positive feedback is also appreciated.

Thank you and good luck in your venture.

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