Can A For Profit Business Take A Tax Deduction For Sales Discounts To A Non Profit? How Would You Book That?
Sorta,
You simply recognize less revenue.
So your gross profit = revenue – cost of sales.
And net profit = gross profit – overhead.
You’ve taken a deduction simply by lowering your revenue.
Comments
Yes, because the non-profit would still have to pay the tax on the invoice raised by the for profit business.
Reduce the invoice value by the discount amount.
Credit Sales, Debit Accounts receivable (Receivables) by the amount for a credit sale, or Bank/cash and Tax for a cash sale.
Blondie
No, you can’t take a deduction for sales discounts. The discount amount was never shown as income in the first place.
NO.
The discounted price means that you collected less revenue, and therefore there is less revenue to report.
Example. You normally charge $100 for something, but you sell it for $70 to a non-profit organization. You would normally report $100 in revenue. Instead, you report $70 of revenue. The $30 tax deduction you’re thinking of is built into the fact that you reported $70 instead of $100, so you don’t actually report a $30 deduction anywhere.