Up to a maximum of $200 per year. Not very exiting.
On a related note, could one create a non-profit open source company, and donate software to it and get tax write-off? Rich folk can get huge tax write off donating art works, we should be able to figure out a similar deal.
The question is how to value the contribution. Few things come to mind, most of them ugly - 1) by time spent at prevailing wage for your experience level 2) by line count 3) by some sort of proxy for market value.
Artworks for the rich have advantage in that there are fewer of them that get attentions and they are more expensive, hence a market for each one easy to establish with auctions, expert opinions, and the like.
I'm thinking we could have some kind of payback thing, where users of open source would declare how much time they saved by using the software, or how much an alternative would cost, and then we could use this as a proxy for value.
Dunno. Just a bunch of random ideas for brainstorming.
Donations are valued at your basis in them. Your basis in software you developed will generally be zero. Your basis in paintings you painted is slightly higher than zero: the cost of paint.
If you buy software or paintings, your basis the "the cost required to acquire them." So if you wanted to buy a major piece of software then donate it (subject to the usual requirements for this to not be abusive), then you'd be able to take the charitable deduction.
In most cases, the people writing OSS work for corporations. Corporations have a very simple way to get tax benefits from supporting OSS work -- expense it. Done.
Indeed, as far as IP is concerned, the following rule governs.
[...] your deduction for a donation of a patent or other intellectual property is its FMV, minus any gain you would have realized if you had sold the property at its FMV on the date of the gift. Generally, this means your deduction is the lesser of the property's FMV or its basis. For details, see Publication 526. [...]
"The basis of an intangible asset is usually the cost to buy or create it."
They don't mention software specifically, but they say that for patents and copyrights you can only include costs you actually paid for, and you specifically may not include the value of your own time spent inventing or authoring.
Although that appears to be true for software or paintings you create yourself (see discussion below), I don't think it's actually true for software or paintings that you bought. In those cases you would deduct the fair market value at the time of the donation (with some exceptions).
This is actually a common tax loophole: you can donate appreciated stocks and get a write-off for the full value, without having to pay taxes on the gains.
I like the concept of deducting some of my time for open source contributions but every solution I've seen is a boondoggle waiting to happen..
* Deduct based on (hours spent * prevailing wage) -> Which prevailing wage? Personally, I'd love to use the hourly rate of Google employees in my deductions. ;)
* Deduct based on (hours spent * current rate) -> Who said I would have been working those hours anyway?
* Deduct based on hours spent * (any number)? That means I need detailed accounting that can stand up to an audit.
* Deduct based on LOC? Woohoo! Time for bloated code!
* Deduct based on time/money saved by companies? Time to call in favors!
* Deduct based on the value of what I learned as an educational credit? I like this one the most but we don't always know what will be valuable at the time.
As much as I want this to work, I don't see a structure that won't result in abuse and shenannigans on day one.
Yeah, honestly, the government should just mark $X to be spent on open source donations / development as its simply less risk for similar results to a tax credit.
Hah, good point. I guess downthread people say you can use it to get a 20% refund on your RAM upgrade or something. Guess you'll have to go that route.
On a related note, could one create a non-profit open source company, and donate software to it and get tax write-off? Rich folk can get huge tax write off donating art works, we should be able to figure out a similar deal.
The question is how to value the contribution. Few things come to mind, most of them ugly - 1) by time spent at prevailing wage for your experience level 2) by line count 3) by some sort of proxy for market value.
Artworks for the rich have advantage in that there are fewer of them that get attentions and they are more expensive, hence a market for each one easy to establish with auctions, expert opinions, and the like.
I'm thinking we could have some kind of payback thing, where users of open source would declare how much time they saved by using the software, or how much an alternative would cost, and then we could use this as a proxy for value.
Dunno. Just a bunch of random ideas for brainstorming.