Thursday, November 27, 2014
Forbes: Taxing Two Thanksgiving Day Gentlemen, by Robert W. Wood:
A central theme of the Bible is that it is better to give than to receive, even when you give up a great deal. Two Thanksgiving Day Gentlemen, a short story masterpiece by O. Henry, gives this theme a twist. A vagabond—today we would call him homeless—is feted each Thanksgiving Day to a grand dinner in a posh New York eatery by a successful businessman. But on this Thanksgiving Day, each man hides his true circumstances.
The businessman is down on his luck so starves for two days in order not to disappoint the vagabond. Ironically, the vagabond is flush, his stomach bursting from two other holiday meals from other well-wishers. Forcing down each bite, he plays along knowing how important this ritual is to his kindly rich benefactor. Only O. Henry could make us feel what each feels as we smile ruefully at the comedy playing out.
In this crowdfunding era, individual acts of kindness still count, even if they don’t produce a tax break. That’s right, the charity the two Thanksgiving gentlemen exchange isn’t tax deductible, since you can’t give directly and get a deduction.
These days when you give you want to deduct it, and you can’t deduct the value of your time or your services. This is so even if you usually bill by the hour and donate many hours of otherwise billable time to charity. And you can’t deduct gifts made directly to the needy even if you’re trying to get your money where it will do some good.