Accounting for Item Donations (i.e. to Goodwill or Local Non-Profit) on Tax Returns

[beastieboy1023]

I sell sports cards on here. The items I buy from my local card shop go directly to the listings. I sell enough to get a 1099K. There’s a local nonprofit that puts together backpacks for kids in need. I donated a significant number of cards and assigned a fair market value to the cards based on something I saw elsewhere to use as an amount. The number of cards donated is in the thousands, so it is a significant dollar amount when you total it.

It seems like, given that these are the items I ended listings of (which may be important...these were live listings on eBay that I physically ended...these weren't things sitting in a corner somewhere) that these donations should be some kind of write off and offset.  But not one just in a general area of the tax return...this ties directly to the reason I get a 1099K and is part of the merchandise which drives the need for me to receive one, so it seems like this should be able to be accounted for as a deduction specifically in the area where you report your 1099K.

Has anyone done anything like this before, in any type of category? And if so, how did you handle it? There's the part on 1099K reporting where you account for what you purchased, supplies, etc...is there a spot for donations as well? Or did you just add in as one of the line items there 'Donation to XYZ'?

Tried to Google this but can't get any decent results, so THANK YOU in advance to anyone who can opine here!

[caldreamer]

https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deduction...

[maxine*j · Accepted solution]

Donated inventory ("property you sell in the course of your business") is covered in IRS Pub. 526.  Scroll down to Inventory:

https://www.irs.gov/publications/p526#en_US_2022_publink1000229740

For cash payments, scroll down to Charitable Contributions, which will refer you to Pub. 526 at some point for donated inventory:

https://www.irs.gov/publications/p535

Or, spare yourself, and protect yourself, and let a tax professional deal with it.  (At least once, and then in future you will know how to handle it. if you prefer to do your own returns.)

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[dnasilver]

Best to hire a CPA or Tax Attorney. Why would you assign a fair market value? Would you not use the actual amount paid? I think one would be playing with fire if they buy something for $10 and then try to write off $100 for donating. 

[beastieboy1023]

It would actually be a lower value, not higher. The average modern 'common card' is valued at about $0.50 (that Beckett magazine, the industry go-to, can be the source for that). So I used that number. Are there cards in there worth more ($1, $2, whatever...not insane variances but more than $0.50)? Yes. Which may make some people ask why are you short-changing yourself then, but it's A) for the reason you described above, and B) simplicity's sake. Sitting there trying to find comps for every card that might be worth $0.99 instead of $0.50 would be nuts.