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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > sole propriortor
Expert: Helen P. O`Planick, EA
Date: 9/17/2008
Subject: sole propriortor
Question
QUESTION: Hello,
clients who are sole proprietors donate their services or goods to charity. I understand that their time is not deductible, but cost of products used and their mileage? Does it all go on sch A..including mileage? Is the mileage accounted for using the volunteer mileage rates?
ANSWER: Are they taking the product off of the Sch C? Or are they paying for it out of their pocket?
Mileage - yes, volunteer rate on Sch A.
Helen, EA in PA
---------- FOLLOW-UP ----------
QUESTION: she is donating products (made into gift baskets) that she would normally sell in her business...past preparers have subtracted the value off her sch c as a charity donation. I have acquired this client ...I am studying for my EA and came across a statement that says sole pro. must take their business charity donations off on sch A, not the C. Am I reading this correctly? what about just adjusting her inventory? Thanks!!!! Debbie
Answer
Debbie, you are reading it correctly. For the inventory, you must reduce it by personal items taken from inventory. If she has paid for them, then she can take them on Sch A. If the business paid for them, no inventory adjustment and just mileage on Sch A.
Good luck on the EA!
Helen, EA in PA and instructor for EA prep course thru NATP.
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