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The Almighty Buck Medicine

Tax Write-Offs For Free (As In Speech) Work? 198

Posted by kdawson
from the time-is-money-isn't-it dept.
deuist writes "Several years ago I wrote a book called The Not So Short Introduction to Getting Into Medical School (PDF) and released it online under a Creative Commons license. I have been asked several times to publish the text so that I can make money off of it. The book has become quite famous among pre-med students and is now available from the Princeton Review as a free CD that is given to pre-medical interest groups. My question to the Slashdot community involves claiming this work as volunteering for tax purposes. Have any of you had any success with releasing free software and then writing off your time when April 15 rolls around?"
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Tax Write-Offs For Free (As In Speech) Work?

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  • by hacker (14635) <hacker@gnu-designs.com> on Saturday October 18, 2008 @03:50PM (#25425907)

    I've written off thousands of dollars every year to OSS, and continue to do so. I have a stellar CPA who was able to find all of the legal places where I can write off money. Here are some of them:

    1. My vehicle gas/travel to and from our monthly LUG meetings
    2. The telephone line into my home, where my DSL is connected (write code at home, upload to server using that connection)
    3. A portion of the monthly power bill, used to keep that DSL, servers and equipment running which is dedicated to the pursuit of writing OSS
    4. The cost of my laptops (running Linux) which is used to write, test and maintain OSS software
    5. The cost of my VMware Workstation license, used exclusively to test code in operating systems I do not run natively
    6. A portion of the taxes on my home, which is dedicated office space, used to write/maintain OSS software
    7. All of the costs from my upstream provider's hosting ($150/month) which is used to host my own projects, as well as those from other FLOSS developers
    8. All of the donations given to me/our projects via PayPal (it's "income", not a "gift", so treated accordingly)
    9. Commission from the Google and LinkXL banner ads run on some sites (used to pay for the hosting and power of said sites)
    10. ..and so on.

    My first suggestion would be to interview and find a top-notch CPA, and book an appointment with him to pour over your finances to see where things can be deducted. They can also retroactively go back years and reclaim funds you did not claim the first time around, if you miss critical deductions.

    • by MSTCrow5429 (642744) on Saturday October 18, 2008 @03:57PM (#25425951)
      I'm not against tax write-offs, and avoiding taxes any way possible, but I'm not aware of any component of the tax code that authorizes individual write-offs for voluntary, non-profit activities. Also, the fact that you are using a CPA for tax prep, and suggesting that others do so as well, scares me. CPAs are not for tax preparation. You have a question about the tax code, you ask a tax lawyer, not a CPA. CPAs are accountants.
      • by the eric conspiracy (20178) on Saturday October 18, 2008 @04:34PM (#25426185)

        Expenses that you pay out of pocket as part of volunteer activities to a not profit organization are generally deductible. The actual time is not.

        www.irs.gov/pub/irs-pdf/p535.pdf

        http://www.irs.gov/publications/p526/ar02.html#d0e867 [irs.gov]

        • I thought this was probably the case for qualified organizations, but what I was indirectly getting at was I don't think out of pocket expenses for volunteer work, for any any organization, is tax deductible. From the general description of what a qualified organization might be, an OSS project may or may not be for educational and scientific purposes. In any case, it hinges upon whether it has IRS approval or not to be a qualified organization for purposes of tax deductibility of out of pocket expenses i
          • Out of pocket expenses for paid work for any organization are tax deductible - any contractor knows that.
            Although I am certainly no tax attorney, I don't see why giving away the work should make a difference.

            • Ask the IRS. Clearly, they do distinguish between paid and volunteer work.
            • Re: (Score:2, Informative)

              by agbinfo (186523)

              First, I live in Canada so tax laws are different. Second I am not an accountant.

              Here we can deduct some expenses for paid work as well - there are limits. Also, if you have a single employer/contractor, it's considered differently so as to avoid people deducting salaried work expenses; These tax deductions are mostly for contract and consultant work. As far as I know, you can't deduct expenses for work you give away - unless it's a registered non profit organization and in this case you would be looking at

        • Right, but is developing OSS software considered work for a qualified volunteer organization? It doesn't seem that it could be...
          • It depends on the contributor agreement. If you assign copyright, as the FSF requires, then you're making a donation of property. If you retain copyright but give the project a license to use it, you're just donating your time.

            • That's assuming that he's not just contributing patches to a pet project or three. There's not really enough information to be sure, but from his post it doesn't /seem/ like he's doing this specifically for FSF or any organization (most LUGs aren't recognized nonprofits).
            • Re: (Score:2, Insightful)

              Nice. Donating "property" to an organization that believes that there is no such thing as "intellectual property". Seems like a little hypocrisy, but maybe that's just me.
        • I'd actually think that claiming your LUG was an acceptable organization might be a bit of a challenge. "Non profit organization" is not the same as "organization qualified to receive charitable contributions / deductions". I think this guy is really stretching the limits of the letter of the law, maybe even more so.
      • by hacker (14635)
        "CPAs are not for tax preparation. You have a question about the tax code, you ask a tax lawyer, not a CPA. CPAs are accountants."

        Unless your CPA is also certified as a tax lawyer as well, as mine is :) He knows the tax code inside and out, and lectures about it to other accountants, lawyer and tax lawyers every year. He is THE TOP in his game in this side of the country.

        • by Anonymous Coward on Saturday October 18, 2008 @05:17PM (#25426465)
          If he truly understands the tax code inside and out, he's the only one in the country who does.
        • Tax code is *code* (Score:4, Interesting)

          by billstewart (78916) on Saturday October 18, 2008 @08:16PM (#25427561) Journal

          My wife, a computer scientist, did tax preparation during the 80s. The tax code is code - is was written to do things, and it's buggy and badly documented, but it's code. At the time she started, most of the tax code generally made some sense - it was full of special interest giveaways, obfuscation, ill-advised attempts at social policy, etc., but she had the impression that the people writing it generally knew what they were trying to accomplish with most sections - but the Reagan "tax cut" years added 30-50% more tax code, and she got the impression from watching the changes that the Congress was losing track of what it was trying to accomplish. There'd be things that got put in one year and patched the next (e.g. they were trying to do a favor for one Indian-run casino in South Dakota, the patch corrected the unintended favor that they'd also done for a casino in New Jersey, etc.)

          The basics about deductability of things you've performed for charity probably haven't changed much since I last looked at it 20 years ago. If they paid you $X for your labor and you donated $X to them, you'd break even. That's not different if you're charging them $0. On the other hand, if you're donating materials in kind, you might be able to donate the costs of those materials - your CPA can tell you, and some kinds of deductions like costs of home offices are so often abused that you need to be very careful if you want to even try.

          However, if you own a profit-making business, it's easier to have things you're doing be done by the business and therefore be expenses of the business. That's still not going to let you get paid for your labor, but costs like your computers, power, etc. are easier to put there, reducing the profit your business makes and therefore reducing your business's taxes. But if your business loses money more than X years out of Y, the IRS says it's not a business, it's a hobby, and you can't deduct the costs.

          • But if your business loses money more than X years out of Y, the IRS says it's not a business, it's a hobby, and you can't deduct the costs.

            This is debatable. The IRS specified:

            An activity is presumed carried on for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).

            On the other hand, I've spoken to several to CPAs who have said there is no limit on how long you can take losses as a business, as long as you're trying to make a profit. You're going to need to prove to the IRS that you're trying to make a profit in good faith though.

            http://www.irs.gov/newsroom/article/0,,id=172833,00.html [irs.gov]

      • Re: (Score:3, Insightful)

        Have you ever seen what it takes to be an Accountant/Certified Public Beancounter? They practically are tax lawyers.
      • Re: (Score:3, Informative)

        by Anonymous Coward

        I am somewhat aghast that this incredibly ignorant comment was modded insightful. Many, many CPA's (full disclosure, including myself) specialize in tax strategy, planning and compliance. The tax advice you can receive from a CPA is often as good as, if not better than advice you could receive from an attorney.
        For today's anecdotal fact, I provide tax expertise to several law firms and their clients. The fact that these firms outsource their work should give you an indication of the relative quality of o

      • by stephanruby (542433) on Saturday October 18, 2008 @08:24PM (#25427591)

        CPAs are accountants.

        Yes, CPAs are accountants. But just to be clear, being an accountant doesn't necessarily mean you're a CPA. In fact, less than 20% of accountants are even CPAs.

        CPAs are not for tax preparation. You have a question about the tax code, you ask a tax lawyer, not a CPA.

        No, it's the tax lawyers that shouldn't be used for tax preparation. "In most U.S. states, only CPAs who are licensed are able to provide to the public attestation (including auditing) opinions on financial statements." http://en.wikipedia.org/wiki/Certified_public_accountant [wikipedia.org]

        Tax lawyers are too highly specialized. Now don't get me wrong, tax lawyers will be able to give you very a precise answer about something that falls within their narrow niche of experience, and they'll be able to give you an answer as long as you already know which right questions to ask, but they won't necessarily have the general legal knowledge of a CPA. And yes, CPAs have general legal knowledge, if you just take a look at their exam sample books, I think you'll see that the legal knowledge and the legal minutiae represents the bulk of their exam, and that the accounting part is really the easiest part they have to know.

        So not only using a Tax Lawyer would probably be overkill, but he would also probably miss important deductions because he'd miss the bigger picture that comes with the experience of preparing taxes and signing his names to them day-in and day-out (that being said, the specialization trap can also apply to CPAs as well, so for instance a CPA who passed his CPA state bar exam twenty years ago and who isn't used to doing taxes at his day job -- will most likely not be a very good choice either).

        • While we're on the subject, don't bother with H&R Block, etc, etc. We did, because of stuff I mentioned in a sister post, of home office use for a fulltime position, substantial volunteer work, leased car and sales tax, a student and credits, credits for running my own business.

          They were generally useless. Utterly useless in fact. We went in and said... "We would like you to help us discuss our options for minimizing tax." They sat us down and filled out the form electronically, much as you would yours

      • by Arroyodude (1388909) on Saturday October 18, 2008 @08:37PM (#25427651)

        ...the fact that you are using a CPA for tax prep, and suggesting that others do so as well, scares me. CPAs are not for tax preparation. You have a question about the tax code, you ask a tax lawyer, not a CPA. CPAs are accountants.

        Wow! Where do I start, except to say that I'm an Enrolled Agent, meaning that I'm authorized ("licensed" as it were) by the IRS to represent taxpayers before all levels of the Internal Revenue Service." In other words, I'm a tax professional with a certification that goes back well over 100 years. Attorneys have had that right for less time and CPAs for a lot less than that. I'm also the tax manager in a small but nationally recognized CPA firm. Most CPAs (including all of the final 4) do lots and lots of tax work, much of it referred by tax attorneys who, for the most part, handle tax controversy matters and answer questions a lot harder than KDawson's. And they do so somewhere north of $300-$400 an hour if they're even half-good. I'll leave it to others to respond to the original poster's query, but will confirm that, no, you cannot write off your time. The tax rules can be complicated (and just because your accountant/lawyer/taxguy says it's so doesn't mean it will be upheld on audit unless the facts support it). Find a good CPA who knows your industry, or better yet, an Enrolled Agent. Or get a referral from a tax attorney.

    • by SL Baur (19540)

      My first suggestion would be to interview and find a top-notch CPA

      Would you be so kind as to post any leads in the SJ, CA area or email me offline?

    • by alphad0g (1172971) on Saturday October 18, 2008 @05:36PM (#25426603)
      You can write off un-reimbursed business expenses and charitable contributions. Working on OSS projects does not qualify as either one unless your company is paying you to do this from home - then you can write off your router/internet/etc. as long as they are for business only. Driving to LUG - how does that fit? LUG is not a recognized charity, nor is 99.999% of OSS. Taxes on your home should be deducted as part of one of your normal itemized deductions; if you are taking another part of them for this OSS work, you are double dipping. Ask your CPA if he will pay the fines when you get audited? You may want to be ready with an alibi when IRS comes knocking - tell them you have a wireless router that has no encryption and someone was parked outside, posting to slashdot. Also, I would find a reputable CPA, as this one is giving you some bogus info.
      • Agreed. He seems to be relying on "non profit organization", which has zero relevance to the IRS for volunteer activities. My credit union is a non profit, doesn't mean I can help them out for free and claim a tax write off. "Non profit educational organization" (the IRS lists as examples, museums, schools, colleges, daycare centers where there are accredited teachers), and 501(c)3 charities. I'm really doubting that his LUG is a 501(c)3. I also ran into the same double-dipping issue when claiming write off
    • Re: (Score:2, Insightful)

      by pubwvj (1045960)
      I'll give you one more way you can save money. Stop using the CPA and do your taxes yourself. It's easy. Just follow the forms and instructions.
  • NO (Score:5, Informative)

    by larry bagina (561269) on Saturday October 18, 2008 @03:54PM (#25425931) Journal

    to get a tax write off, you need to donate money (or materials, which cost money at some point). Your time has no value for tax purposes.

    • When you write anything, and retain the copyright, that is an asset. You can donate that asset to a charity and claim a deduction of the fair-market value. How much is a document, or your software worth? I dunno, but there are companies you can pay to give you an opinion. They charge a percentage of the value.

      So, yeah, all that software your wrote for the FSF after executing their copyright assignment form? Deducation!

      • by Dare nMc (468959)

        When you write anything, and retain the copyright, that is an asset.

        but generally when you create something of value, you have to pay taxes on it. So if you claim income for writing that software, then absolutely you should come out even after the your deduction. Granted if you bought something with after tax money, like a car, then gave it to charity, you can claim that. But, if that item appreciated in value you would need to pay capital gains on the item, maybe coming out slightly ahead in taxes. So

  • In Soviet Russia, ALL work gets paid (useless or not) ...not that your work is useless. If people are looking at it and using it and telling you to publish, you should probably do it if you want the money. If your writing was utter trash and you tried to publish it (or it actaully got published) then you wouldn't get paid for poor quality work.

    The idea that you get a tax rebates for voluntarily working on something is interesting, but do taxpayers want to pay for this kind of work?

    I would like to know what

    • Re: (Score:3, Insightful)

      by jlarocco (851450)

      Lol! A "tax write off" is not a rebate. It has nothing to do with the government paying people. It's something that lets you pay less tax than you normally would. Unless you really think you have a right to other people's income. In which case your lame Soviet Russia joke would actually be kinda funny, though not in the way you intended.

      For example, you can get a tax write off for donating money to charity. A very simple, probably numerically incorrect, example: if you made $50k last year and donat

    • by billcopc (196330)

      You don't actually get a tax rebate for volunteer work. You can write off any expenses directly related to the volunteer activities (travel, materials, and meals under strict circumstances).

      Submitting code to yet another half-assed IM client on SourceForge does not magically entitle you to not pay income tax for your day job.

      That said, there's a whole mess of funky stuff going on with the US tax laws. Some folks argue that there is no law in existence forcing US citizens to pay income tax! I take it with

    • The philosophy here is that we tax income of the individuals and corporations, expenses incurred in pursuing that income are subtracted or deducted and the remainder is taxed at a percentage that increases as the entities net income increases. Sometimes we get a special deduction for something that is socially valuable like a money or material donation to a charity. We infrequently get a tax credit for some things, the unused portion of a credit is refunded to the tax payer.

      Individuals can't claim time as a

  • by peterofoz (1038508) on Saturday October 18, 2008 @03:57PM (#25425949) Homepage Journal

    I'd looked into this for another charity (Boy/Girl Scouts) I help out with a lot and found that I can't deduct value for my time. In order to take a tax deduction I have to donate things like: cash with a receipt, goods (fair market value), or mileage documented in a diary or expense report.

    In short, your time is worth nothing to the IRS unless you first convert it into cash, thereby establishing it's fair market value. Then you donate the cash.

    If you'd like some kudo's, there is always the Presidential Service Awards [presidenti...awards.gov]. They have a section for Computers and Technology. When you hit your bronze/silver/gold levels you can get it vetted and send your $6 to get a certificate. You'll probably also get letters from your local politicians who are plugged into the recognition process.

  • Ask the IRS... (Score:5, Informative)

    by Yosemite_Mark (595102) on Saturday October 18, 2008 @03:58PM (#25425967)
    From Tax Publication 526, under the heading "Not Deductable As Charitable Contributions" : "Value of your time or services". Many out of pocket expenses you incur while serving as a volunteer are deductible, though.
    • All true. However, all the software you write has a fair market value, even if you GPL it, because you could also license it on a proprietary basis. You can assign the copyright to a 501(c)3 and deduct the fair market value, just as you can any other donation of property.

      • To do so, the 501(c)3 has to accept the assignation explicitly, and it has to be of value to that organization. You can't say "Oh, btw, the Humane Society has copyright over this IM application I wrote, which I determine is worth $25,000". To be of value it has to be something the 501(c)3 uses internally, is able to realize the fair market value from, or use for promotion of the 501(c)3s stated charter.
      • all the software you write has a fair market value, even if you GPL it

        We're talking about the IRS here: unless there's actual money involved (at some point), it has no value. Hypothetical dollars (money you could've made doing other things) don't count.

    • Is code not considered an assignable asset with value?

  • You can't take a tax deduction for time you volunteer. The fact that you're doing so in a convoluted manner doesn't help.
    • You can take a write-off for your expenses, however. If you have, for example, purchased a computer which you only use for improvements to software owned by a 501(c)3 (and you assign copyright to them), then 100% of that computer is deductible. Same thing if you bought tools to work on your church's garden. Or your camping gear if you have to go camping as a scout leader.

      Noting controversial here.

      • by mlc (16290)
        Sure. But the original question was about taking a deduction for the time spent writing the book which, even if the copyright of the book were donated to a 501(c)3, would not be allowed.
  • My question to the Slashdot community involves claiming this work as volunteering for tax purposes. Have any of you had any success with releasing free software and then writing off your time when April 15 rolls around?"

    How exactly do you propose writing off your time? As a charitable deduction? On Schedule C (Sole Propietorhip Income & Loss)? No matter...I don't think the IRS will let you deduct this either way.

    Generally, self-provided services are not eligible for charitable deduction, ditto Schedule C. It makes sense if you think about it. When you take a deduction on Schedule C, someone else must pick up income. If you were the creator of the labor "sold", you created both the income and deduction. If the

    • How exactly do you propose writing off your time?

      Can't. Not allowed. However, under the Berne Convention, you hold copyright to all of your creative works. If you donate that copyright through assignment to a 501(c)3 or other qualified organization, the fair-market value of that donation is deductible.

      Not that the latter is easy to value. But it *does* have a non-zero value.

  • No go.... (Score:5, Informative)

    by Panaflex (13191) <convivialdingo.yahoo@com> on Saturday October 18, 2008 @04:01PM (#25425995)

    From my understanding, volunteer work is not tax deductible. Tangible assets and money given (like miles driven, money and items donated) may be deductible in certain situations.

    In other words - you need receipts for things you used in the service of making your work for non-profits. And, technically speaking, you're going to need a 503(c) charity status as well.

    If you want to run a 503(c) and give it away, you can certainly do that. But the only money you would be able to deduct is the money you would spend on the creation and operation of the charity organization.

    Disclaimer: You milage may vary, offer not valid in the state of California, I'm not a lawyer and you're likely to end up in Gitmo following my advice, married with 16 children, and bald. Some people experience adverse reactions to this advice, such as lucid dreaming, extended erections, overgrown toe and nose hair, and quite possibly death by shotgun in the night. Drink responsibly.

    • You're correct in that he can't deduct his time as a donation, but if he were to donate the copyright in the book, that's an asset ("intellectual property"), which apparently has value.

      To claim a deduction, he would have to donate the book's copyright to a registered charity, which agreed to receive it. To figure out how much he could claim as a deduction as a result, he'd have to get the value of the book's copyright appraised by someone with expertise to do so who is neither affiliated with himself nor wi

  • MS model? (Score:5, Interesting)

    by wurp (51446) on Saturday October 18, 2008 @04:06PM (#25426027) Homepage

    If you charge for something, and have purchases, then isn't any copy of that thing that you give away a business loss?

    How is this different than MS writing Vista, which they sell, then taking a tax write-off for the full value of Vista when they give 100,000 copies to schools?

    You're not writing off your time; you're writing off the value of the goods you gave away.

    I am not a lawyer or an accountant. I'm just asking the question :-)

    • Re: (Score:3, Interesting)

      by conlaw (983784)
      wurp, I think you're on the right track. Altlhough I am a retired lawyer, I never practiced tax law. However, I believe that the following analysis falls within the terms of the IRS code.

      Assume that the good doctor had originally copyrighted the material and sold a bunch of the books/CD's, etc. at a reasonable price (let's say $20-$25 each). Now, however, the doctor has seen the light of FOSS and starts giving the books away to aspiring med school students. I would argue that this puts the doctor in the

      • by AySz88 (1151141)
        Since he is still the full copyright holder, can he still sell, say, a single "normal" hard copy? The copy sold in this way should have strictly less value than if he had been selling the books copyrighted in the first place (since there are already so many free copies out there), and thus it establishes a lower bound on the value of a copy, no?
  • Ask not... (Score:4, Funny)

    by Ottair (1270536) on Saturday October 18, 2008 @04:06PM (#25426029)
    what you can do for your country, ask what the IRS Code, Section 12, paragraph 14 can do for you.
  • It's A Hobby (Score:5, Interesting)

    by Nom du Keyboard (633989) on Saturday October 18, 2008 @04:09PM (#25426039)
    When you aren't making money from an endeavor, especially if you can't point out how it may lead to making money in the future, it's not a job to the I.R.S., but a hobby. And you can't write off expenses of a hobby. The earlier poster who says his stellar C.P.A. who found lots of write-offs has likely yet to survive an I.R.S. audit over them. You may not be so lucky.

    You will receive lots of suggestions here. Mine is, and I've worked as a consultant and had write-offs, that you need to show how all these efforts are leading towards profits in the future. It's not a crime to lose money in your business, however, after a certain point (IIRC 3 years, but talk to a professional about this) the I.R.S. will no longer consider your efforts a business.

    One suggestion: Chalk all this up to generating resume cred for future jobs that do pay.
    • by uncqual (836337)

      however, after a certain point (IIRC 3 years, but talk to a professional about this) the I.R.S. will no longer consider your efforts a business.

      I'm fairly sure that an effort that loses money for more than three years can still be considered a business rather than a hobby (else, some airlines would be hobbies!). However, I think the burden of proving it's not a hobby shifts strongly to the taxpayer after (IIRC) three years of no profits. Obviously airlines meet this test trivially (who, in their right min

      • Yeah, it's not so much making a loss... it's losses as a percentage or ratio of revenues. If you show nearly zero revenue every year, but lose money, that screams "TAX AVOIDANCE!".
    • IANAL, but I assume there must be a distinction between a hobby and volunteering for a registered non-profit organization such as the FSF. I'm guessing starting your own non-profit is complicated, but you might be able to get your project adopted by an existing organization.

      • Are you kidding having a nonprofit is big business, it can be too complicated. One of my neighbors went from being a janitor to being the executive director of a non-profit and got paid a shit-pile of money.

    • If you write software, hold the copyright, and donate that software to a 501(c)3 by assigning the copyright, you have made a donation of property. Exactly how much is a bit tricky to figure out. But that's just a detail. You're allowed to deduct the entire fair-market value of your donation from your taxes (although you can't donate more than half of your income in any one tax year).

      • The issue is that, when you donate anything, you get to deduct your cost basis or fair market value, whichever is less. When MSFT donates software, they can only deduct the cost of the media, and direct costs of delivery.

        So, while you may grant rights to your software to some organization, you can only deduct any direct, receipted, out of pocket costs for getting the software working at the donee, but you don't get to deduct anything for your software, because your cost basis is zero. As far as the tax co

      • You have a citation for not being able to donate more than half of your income in a year? I'd think I should be able to donate all of my income if I choose.

    • "And you can't write off expenses of a hobby."

      It's been a while since I looked this up (about five years), so the tax laws may have changed. Back then, though, you could deduct from your taxes as much as you earned with your hobby. So if your regular job grossed $40,000, and your hobby grossed you $500, you could deduct up to $500 of hobby revenue in addition to whatever other tax deductions you claimed.

    • Your charity work may be a hobby, but that's not where you need to look in the IRS publications to find what's deductible. If your charitable hobby benefits a legitimate charity, then you'll want to keep track of things like your cash and in-kind donations, mileage, parking fees, tolls, etc. Unfortunately, time contributed for a charitable cause is not deductible. I've put a lot of time into serving such organizations, and I wondered if my time was possibly deductible (as something "in-kind"). The IRS h
  • Money spent on computers, rented space, electricity, & time for writing free software is all after taxes. U better start charging money.

  • double dipping (Score:5, Interesting)

    by jdh3.1415 (800944) on Saturday October 18, 2008 @04:18PM (#25426101)

    You can't write off volunteer time. That would be double dipping. The good news is you don't have to pay taxes on the money you didn't earn while working on your book.

    Imagine your time is worth $50.00 / hr. You could donate 100 hours of time by working for 100 hours for $5000. Then, you could donate the money back to the charity and deduct the $5000. Or, you could work for free for 100 hours and forgo the deduction. Both scenarios would put you in the same place tax wise.

    On the otherhand, if you worked for free and took a deduction, you would essentially be taking the deduction twice. The IRS doesn't take kindly to this.

    • by i.r.id10t (595143)

      So work for them as a consultant, give 'em a bill, and then give 'em "back" the $$ they pay you as a donation

      • If you do that, you need to declare the amount of the bill as income and pay tax on it.

  • I would think it would be like a home business, the IRS wants you to PROVE you used the space.
  • by bferrell (253291)

    is a CPA or tax lawyer

  • I pursue the occasional $hobby. As this activity is popular with you, the /. readers, don't you think any and all time spent towards $hobby somehow absolves me of some of my tax burden?

    Don't you think that the funding of all governmental activities is somehow less my responsibility since I pursue said $hobby?

    Shit dude... the other day I did something for someone. Where's my 40 acres and a mule? Why the fuck should you pay less in taxes because you help write foss? If you are running a business, and re

    • your police, fire, water, and multiple wars aren't going to pay for themselves.

      But they could save themselves money using donated FOSS.

      • by gandhi_2 (1108023)
        My local city office, including the police, use open office. My school district uses freeBSD, koha, apache, and a few hundred other FOSS systems (and even contributes). My local college...they use and teach nfs, samba, openLDAP, and a few thousand small FOSS projects.

        This doesn't change the fact that it's tacky to expect everyone else to subsidize your hobby thru offsetting public costs.

    • Shit dude... the other day I did something for someone. Where's my 40 acres and a mule? Why the fuck should you pay less in taxes because you help write foss?

      And yet, Congress writes tax law, and the IRS implements it, and they allow you to deduct some of your expenses (but not time) in performing a service for a qualified "someone". Your problem --tax wise-- is you picked the wrong guy. It may not make any sense to you, but Congress must have wanted to do a little something to encourage charitable behavior. I guess if you don't like that, you can write your representative and ask that this deduction be removed, but I won't like you if you do.

  • It looks from the comments that time doesn't count as a write-off. But I bet that if Microsoft donates a bunch of copies of Windows, or just gives them a number of licenses, to a non-profit, that counts as a charitable donation. Am I wrong?

    If donating software to an organization counts as a donation, then one should be able to make a claim that by giving copyright to the FSF one is making a donation of goods, to be assessed at the market value of the code.

    I suspect, though, that just releasing OSS by ones

    • MSFT can only deduct their direct inventory costs for the donated software, which is the cost of the media and box. For Office, for example, they probably get to deduct about $30/copy. When any business donates inventory, they get to deduct only their cost basis in the inventory, or fair market value, whichever is lower. For MSFT, their inventory cost for a copy of Office is trivial.

  • by zotz (3951) on Saturday October 18, 2008 @05:40PM (#25426619) Homepage Journal

    and I think it may even be good advice. What is it worth to you though?

    I was going to give it at no cost, but then I checked the license on your book and it has the NC clause in it.

    So, Use BY-SA or BY instead and drop the NC and I will give the advice gratis. Or let me know if you are interested in paying for some advice.

    I know this may sound snarky, but it is not meant in that way.

    all the best,

    drew

  • First, CPA do books, not taxes. If they do taxes as well, they are tax preparares and that is not the same thing as a cpa. Kind of like a plumber AND and air cond. guy. He can do both, but he's licensed and passed tests for each (in my state, anyway).

    Just remember, you are going to get a lot of advice, and it falls on a bell curve rated "utter foolishness" to "Mind blowing". If you don't get a professional opinion, you could end up really hurting yourself.

    At the very least, seek out a licensed professional

  • You can't take a deduction for labor. Simple as that. I wish you could. I design websites and do computer training (mostly MS Office) for a number of organizations locally, adding up to some 300 hours a year. (I keep track of it.)

    Not a single minute is tax deductable, but like others have said -- your mileage and expenses usually are.

    Instead... look for ways to make money off your volunteer work. If you own a business, exchange your volunteer time for promotional mention in the organization's newslette

  • I have been asked several times to publish the text so that I can make money off of it.

    Why?

    Why is someone asking you this?

    Perhaps because they don't want the information to be freely available. Perhaps they want to eventually hide and/or charge for the information down the road.

    Sound like RIAA/MPAA, DRM to you?

  • by XaXXon (202882) <{moc.liamg} {ta} {noxxax}> on Sunday October 19, 2008 @12:39AM (#25428905) Homepage

    If you could write off the value of your time, all you'd have to do is work 40 hours/week, volunteer 40 hours/week and not pay any taxes ever.

  • by rfc1394 (155777) <Paul@paul-robinson.us> on Monday October 20, 2008 @05:24PM (#25446413) Homepage Journal

    For tax purposes your labor is worth exactly zero and thus your work to produce the book is worth exactly zero and that's how much you can legally deduct. Yeah, the laws are rigged against you but that's how the game is played. Any actual out-of-pocket expenses - cash you spend or credit on your cards - are deductible, however. But you either have to be donating the cost to a charity or taking it as a business loss by declaring it a side business.

    I'm presuming you want something legally defensible if the IRS audits you. If you don't care about whether it will withstand an audit and expect your chance of audit is low, you can try it but if you get caught, if your tax goes up there will be interest and if the difference is big enough, penalties. If it can look like a simple misreading of the tax laws then that's all you might have to worry about. If the IRS thinks it was intentional tax evasion then it gets very sticky. So we probably want a better solution if one is available.

    So the short answer is no, you can't deduct your labor, but, if it can be determined the book has some sort of value then you might be able to donate that to a charity; some authors have donated their personal papers and gotten estimates of their value, and could donate that and deduct that, legitimately.

    But that's not where the story ends, which is why tax accountants and lawyers make big bucks. I don't know if either of the following is legal, it was just right off the top of my head, but, then again, I'm not a lawyer nor a tax accountant. So you'd have to ask one and if these aren't fully legal as is, you might still be able to use the ideas from one or both of them or some variant. Or an attorney might know a legal way to do it.

    1. Incorporate, have your corporation "pay' you with a promissory note for the value of your services, have it own the book, and when it can't pay you, take a loss for the value of the note. Possibly do the same thing as I suggest in the item below, have it purchase some things you would normally spend your own money on, then deduct the money loaned to the corporation as a loss when it is closed. As I point out below, if you even have to file an 1120 (Corporate income tax return) it's only going to show income and expenses, it is not going to explain what specifically the expenses were for. Depending on how it's done it might or might not work. If it's too nakedly obvious it will look suspicious and might not fly.
    2. Set up a member-managed LLC, have it own the book, and charge it for the cost of the book. LLCs can be treated as pass-through entities, losses it incurs are charged to you, income it receives is treated as if you made it, so it's possible that the losses on the book, since it's not your labor, are deductible to you. If you loan the LLC funds and then have it purchase things with that money that you would normally spend personally, arguably then the costs it spends can be passed through to you as losses, and since you don't get any profits, there's no offsetting profits to account for. The IRS is not going to know what the LLC spent money on as it doesn't file a return, you do. Might even be reasonable if it "fails" in its first year as many businesses do, then you won't even have to pay the renewal fees!

    Again, I don't know if either of these will withstand scrutiny either, but a good tax accountant or tax lawyer might be able to figure a scheme that does work.

    If you learn how things work it isn't that hard to do them. I have a corporation which I'm not using right now, it only costs $25 a year to renew its charter, so I do, and every year I file state and federal returns showing income and expenses as zero. Since it doesn't get paid anything and basically spends no money except for what I have it do, it requires very little trouble. Since I don't need the deductions right now, I don't use all of the rules that are allowed, but if I do I have the tools to do so.

    You could set up your own non-profit corporation (will

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