Can construction company claim tax deduction for donating labor and materials?

What about if the construction company had already purchased the materials specifically for this job - does that change anything? Could they deduct the materials as a business expense instead since they were acquired for a specific project?

If the materials were purchased specifically for this job, you actually have a slightly different situation. Since the materials were acquired as part of your ordinary business operations, you can deduct their cost as a normal business expense on your company tax return. This is generally more advantageous than treating them as a charitable contribution. For the labor component, while you can't claim it as a charitable deduction, the wages paid to employees who performed the work would still be deductible as a normal business expense. So in this scenario, you'd get the full business deduction for both materials and labor costs, just not as a charitable contribution.

How accurate was the info compared to what an actual CPA would tell you? I've been looking for something that can help with these niche tax situations without having to pay $300+ for a simple question.

Did it help with the actual Form 8283? That's what always confuses me - figuring out how to complete all those sections and knowing which appraisals are actually required.

The information was surprisingly accurate - I verified it with my CPA afterwards and he confirmed everything was correct. He actually asked what resource I'd used because it had covered some nuances he typically has to explain to clients. The best part was getting answers immediately instead of waiting for an appointment. As for Form 8283, yes it was extremely helpful! It walked through each section step-by-step, explaining when appraisals are required (generally for items over $5,000) and how to properly document different types of donations. It even provided templates for the acknowledgment letters needed from the non-profit organization.

Wait, there's actually a way to speak to a real person at the IRS without waiting on hold for 3+ hours? How exactly does this work? I'm honestly skeptical that anything could get me through their phone system.

This seems too good to be true. I've literally spent DAYS trying to get through to the IRS about a business donation issue. If this actually works, it would be a game changer, but I'm really doubtful any service could crack the IRS phone system.

It uses a system that navigates the IRS phone tree for you and waits on hold in your place. When they finally get through to a person, you get a call back to connect with the agent. I was skeptical too, but it worked exactly as advertised - I got a call back about 83 minutes after starting the process rather than spending that whole time with my phone stuck on speaker. The real advantage is you don't have to keep redialing when you get disconnected, which happened to me 4 times when trying to do it myself. And you don't need to block out your entire day waiting on hold - you can actually go about your business until there's an agent ready to talk.

Isn't this basically just circular billing to get around the IRS rules? I thought the IRS could disallow deductions if the transactions don't have true economic substance beyond tax benefits.

It's definitely not circular billing if done properly. The key is that each transaction needs to stand on its own with genuine economic substance. We complete the work and issue a legitimate invoice that the non-profit is technically obligated to pay. Then, as a completely separate transaction, we make a charitable donation to their organization. The transactions should be separate and there should never be any contractual requirement that you'll make the donation contingent on them accepting your bid. The non-profit should record the full expense of your services and then separately record your donation as contributed income. This approach actually provides better transparency for both parties' financial records.

Yes! We did exactly this last year. The key is proper documentation. We created a detailed invoice showing the full project costs, then specifically marked the materials that were donated. We got the non-profit to provide an acknowledgment letter specifically for the materials (valued at fair market value). We also took photos of all the donated materials.

Make sure your invoice and documentation clearly separates the materials from labor. I'd also recommend having the non-profit explicitly acknowledge receiving the materials as a donation separate from any services. Our accountant suggested creating two separate transactions - one for the labor we charged and another for the materials we donated.

This is really helpful information about the appraisal requirements! I'm curious though - when you say "qualified appraisal," does this need to be done by a certified appraiser, or can it be someone with specific expertise in construction materials? Also, is there a time limit on when the appraisal needs to be completed relative to when the donation was made? I want to make sure we don't miss any deadlines if we haven't gotten this done yet.

Great question about the appraisal requirements! For IRS purposes, a "qualified appraiser" must be someone who has earned an appraisal designation from a recognized professional organization OR has met specific education/experience requirements outlined in IRS regulations. For construction materials, this could be a certified appraiser who specializes in building materials, equipment, or real estate improvements - they don't necessarily need to be a general certified appraiser. Regarding timing, the appraisal must be conducted no earlier than 60 days before the donation date and no later than the due date (including extensions) of the return on which the deduction is first claimed. So if you donated in 2024 and are filing by the typical S-Corp deadline, you still have time to get this done, but don't delay too long. The appraiser will need to complete Form 8283 Section B and provide a detailed appraisal report. Make sure they understand this is for a charitable donation so they value the materials at fair market value, not replacement cost or wholesale cost.