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We are renting a commercial building from a non-profit. Can our company (s-corp) buy things and have someone on our payroll do things for the non-profit? Not asking for a donation receipt. Just wanting to support the non-profit. It would reflect as a regular expense on our side. Example: just built a carport for the non-profit on their grounds.

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    Are you paying your employee for their time? That's already a business expense for you.
    – quid
    Nov 4, 2016 at 22:56
  • Assuming you had their approval for the construction, there's no reason you can't do this whether they are nonprofit organization not, unless there is something you aren't telling/asking is...
    – keshlam
    Nov 5, 2016 at 1:03
  • Note that without a receipt from them, it isn't a tax deductable donation, if that is what you are asking. But it may be a deductible business expense if you can justify it as such; that's a question I would ask a pro.
    – keshlam
    Nov 5, 2016 at 8:32
  • Wait - I don't think pass-through corps can make "charitable deductions" at all as a rule, right?
    – Fattie
    Nov 5, 2016 at 11:36

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Yes. The S-Corp can deduct up to the amount it actually incurred in expenses.

If your actual expenses to build the carport were $1000, then the $1000 would be deductible, and your business should be able to show $1000 in receipts or inventory changes. Note you cannot deduct beyond your actual expenses even if you would normally charge more. For example, suppose you invoiced the non-profit $2000 for the carport, and once the bill was paid you turned around and donated the $2000 back to the non-profit. In that case you would be deducting $1000 for your cost + $2000 donation for a total of $3000. But, you also would have $2000 in income so in the end you would end up with a $1000 loss which is exactly what your expenses were to begin with.

It would probably be a good idea to be able to explain why you did this for free. If somehow you personally benefit from it then it could possibly be considered income to you, similar to if you bought a TV for your home with company funds. It would probably be cleaner from an accounting perspective if you followed through as described above- invoice the non-profit and then donate the payment back to them. Though not necessary, it could lesson any doubt about your motives.

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An S-corp doesn't pay income tax -- taxation is pass-through. This being the case, there are no tax deductions it could take for charitable giving. The solution would be for you to make the contribution out of your own pocket and then personally claim the deduction on your own taxes.

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    Not quite correct. The S-corp can make the charitable contribution and has similar rules about deducting/expensing as individual donations. If the S-corp has multiple shareholders, donations would pass-through accordingly.So there could be a benefit to making the contributions through the company if the shareholders want to share the deductions.
    – Rocky
    Jan 10, 2017 at 23:05
  • Source smallbusiness.chron.com/…
    – Rocky
    Jan 10, 2017 at 23:06
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    @Rocky You should write your own answer to this question.
    – Ben Miller - Remember Monica
    Feb 10, 2017 at 12:15

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