I’m an avid guitarist and own a bunch of guitars that I enjoy playing for different styles of music. I don’t collect them for the sake of collecting, though. If I’m not playing a particular instrument, I sell it or give it away.
A few years ago, I donated a couple of guitars to a local organization that was conducting an instrument drive. The charity arranged with a music retailer to fix up the instruments and give them to needy children. I felt good, knowing someone would enjoy playing them, and I got a nice tax deduction.
When it comes to eyewear, there are a number of well-known nonprofit organizations that collect and redistribute it to needy people. Some, including the Lions Club and New Eyes for the Needy, accept donations of “usable” eyewear, often from consumers. Others groups such as Restoring Vision accept donations of new reading glasses and sunglasses, usually unused inventory provided by manufacturers.
Opticians and optometrists can also donate surplus inventory such as reading glasses, out of style frames or accessories. This type of product charity, or gifts-in-kind donations can help not only the needy recipients, but can be financially advantageous to the donors too.
According to the National Association for the Exchange of Industrial Resources (NAEIR), the largest gifts-in-kind organization in the U.S., donors can take advantage of a little-known federal tax break known as IRC Section 170(e) (3). It states that when C Corps donate their inventory to qualified 501c3 nonprofits, they don’t just receive a tax deduction: They can receive a tax deduction equal to up to twice the cost of the donated products.
Under the tax code, deductions are equal to the cost of the inventory donated, plus half the difference between the cost and fair market selling price, not to exceed twice the cost.
For example, if your product costs $10, and you sell it in store for $30, the difference is $20. Half of $20 is $10. So, $10 (product cost) + $10 (half the difference) = $20 deduction. Twenty dollars does not exceed twice the product cost, so it does not exceed the maximum allowable deduction. It’s that simple… and advantageous, NAEIR says.
To learn more about the process, visit naeir.org.
• Andrew Karp
Group Editor, Lenses and Technology