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GermShep

Is a Business license required?

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 Hi. I am a person that has two dogs that I breed and sell puppies from. I also donate many of the puppies to disabled people to be trained as service dogs  and other people as well.

 

My question is do I need some sort of business license, tax ID number, or anything so that I can write off the puppies that I donate?

 

This is not a business that I live off of. It is just something else that I do, mostly to help others.

 

I would appreciate it if I could know for sure if it is legal to write off the cost of the donated puppies on my taxes.   It cost me a lot of money to breed and take care of the puppies until they go to their homes and they are definitely worth a lot of money, but I am not in it for the money I am in it to help people.

 

Please let me know so I don't get into trouble with Uncle Sam.

 

Thank you so much! 

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Whether you need a business license is a matter of city, county, or state law.  More than likely you do if you are making any profit.  Whether you can write off the value of the donated puppies depends on whether you are breeding them for profit.  If you are reporting the income from the sale of the other puppies and deducting the expenses and have net income you could deduct the value of the donations.  If you have no net income, you are perfirming a hobby and can't deduct the value of the donations.

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3 hours ago, RetiredinVA said:

Whether you can write off the value of the donated puppies depends on whether you are breeding them for profit.  If you are reporting the income from the sale of the other puppies and deducting the expenses and have net income you could deduct the value of the donations.  If you have no net income, you are perfirming a hobby and can't deduct the value of the donations.

 

I disagree with this. Whether or not the activity is a business or a hobby does not matter because donations to charity are not a business deduction taken under Internal Revenue Code (IRC) section 162. Deduction of charitable donations are instead governed by IRC § 170 and under that section it doesn’t matter how the taxpayer earns his/her income. What matters is whether the donation is made to a charity as defined in the Code and whether the donation exceeds a specified portion of the taxpayer’s adjusted gross income (AGI). IRS Publication 526 discusses the rules for charitable donations in detail. The problem is that if GermShep is giving the puppies directly to needy people then the donations are not deductible charitable donations. The puppies would have to be donated to charitable organization (one except from tax under IRC 501(c)(3)) in order to qualify as a charitable deduction. The gifts to needy people also are not deductible as a business expense (assuming the breeding activity qualifies as a business) since giving away puppies to needy people is almost certainly not an ordinary and necessary expense in breeding puppies for sale to those who can afford them.

 

With this in mind, I would suggest that GermShep either look for a charitable organization that provides service dogs to the needy and donate the puppies to that organization or that he/she consider starting that kind of charitable organization himself/herself. If he or she wants to start such an organization, I would recommend he or she see a tax attorney who practices in the area of charitable/exempt organizations for advice.

 

Once the puppies are donated to a qualified charity, there will be an issue of how much may be deducted for the puppies that are donated, too.

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