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ezcpa
ezcpa, CPA
Category: Tax
Satisfied Customers: 171
Experience:  Certified Public Accountant
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I have a Tax question: I own a couple of S corporations in

Customer Question

I have a Tax question:
I own a couple of S corporations in Florida. I am a big believer in giving to charities. We've given a substantial amount in 2011, around 20K, between our personal and corporate giving. I've gotten conflicting information regarding whether I can give from my corporation and get 100 % deduction or do I have to run everything through my personal return (with itemizing my deductions)?

I appreciate your prompt reply.
Submitted: 2 years ago.
Category: Tax
Expert:  ezcpa replied 2 years ago.

Hello. Thank you for using Just Answer.

 

Yes, your S-Corporation can make charitable contributions.

 

The problem is the limits and tax reporting requirements are on a personal level. Therefore, contributions reported on your 1120S will flow to your K-1 with contributions separately stated.

 

On your 1040, you can take the contributions reported by your corporations on the K-1 to Form 1040 Schedule A. You have to itemize to deduct the charitable contributions. There is no way to deduct them directly from your S-Corp ordinary income.

 

I hope this answers your question. Please let me know if you need additional information or click to accept.

Customer: replied 2 years ago.

To Clarify,do you see that it would be an advantage if our giving was through our corporation in contrast to our personal return?

 

Are we able to give through our corporation and see 100% deduction?
As opposed to giving through our personal return and only being able to itemize from the schedule A which reverts back to our marginal tax bracket?

 

Where you reference the limits and tax reporting requirements on a personal level, does this mean that we would still get 100% deduction through our corporation but be limited to no more than 50% (which I understand as the maximum in reference to AGI) on our personal return?

Expert:  ezcpa replied 2 years ago.

No way to deduct more using the S-Corp vs. personal.

 

The only advantage is usually that the corporation has more money and usually businesses like the recognition a donation brings to your business. Some aggressively argue that funds donated to an organization was actually "advertising" an ordinary and necessary 100% deductible business expense. If you donated to charities where your business got advertising (printed t-shirts or recognition in newspaper) this might work.

 

As far as limits, as I said you must use Schedule A. So Yes, 100% flows from the S-Corp plus your personal contributions and the total can be no more than 50% of your AGI (which includes the S-Corp ordinary income). The rest is carried forward and can be used during the next 5 years.

 

 

 

ezcpa, CPA
Category: Tax
Satisfied Customers: 171
Experience: Certified Public Accountant
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