Reuters Boxes of Girl Scout cookies sold in 2012.
Last weekend, The Wall Street Journal ran an article on how some states, like Idaho, tax the sale of Girl Scout cookies. That got us thinking about another tax-related question having to do with Samoas and other Girl Scout treats.
Why aren’t Girl Scout cookies tax deductible?
The wholesale cost of a box of cookies averages about $1 a box, and they sell for $3.50 to $5, according to the Girl Scouts. (Local councils set the price.) Shouldn’t the few dollars’ difference be tax deductible as a donation?
Michelle Tompkins, a spokeswoman for the scouts, explained in an e-mail that the group interprets “standard” Internal Revenue Service guidance to find that the cookies are not tax deductible, if you buy them and take them home to eat. In that case, “you’ve purchased a product at a fair market value,” she wrote. “For this reason, no part of the price of a package of Girl Scout cookies used in this way is tax-deductible.”
If, however, you pay for the cookies, but leave the boxes with the Girl Scouts as a donation, you can deduct the cost of the cookies. (Why on earth, you may ask, would you pay for Thin Mints, if not to eat them as soon as possible? The answer is that the cookies can be donated as part of the organization’s “gift of caring” program and sent to someone else, like to soldiers overseas.) “Customers not receiving Girl Scout cookies don’t benefit directly from paying for them, so those individuals may treat the purchase price of the donated cookies as a charitable contribution,” Ms. Tompkins wrote.
You can also donate the cookies you buy to another charitable organization and take the value as a tax deduction.
Gregg Wind, an accountant in Los Angeles, says I.R.S. rules (see Publication 526) say you can’t deduct anything from which you receive a personal benefit. So, for instance, when you buy a $100 ticket to a fund-raiser that includes a $50 meal, you can’t deduct the cost of the meal, just the remaining $50.
In the case of Girl Scout cookies, he said, it doesn’t matter so much how much the box of cookies cost the Girl Scouts, but rather what the going price is for a box of cookies. When you pay for Girl Scout cookies, the price is “fairly close to what a box of cookies would cost in the store,” he said.
It occurred to us at Bucks, though, that some store cookies were similar to Girl Scout cookies and might be priced differently. If you are really determined to get a tax deduction, why not, perhaps, compare the price of the store cookies with a box of actual Girl Scout cookies and then follow the general rule of subtracting the fair market value to arrive at a deduction? If the price for the store version is $3 and the Girl Scout version is $5, you can perhaps argue that the fair market value is $3, and you are making a deductible donation of $2. (It probably wouldn’t be worthwhile, though, unless the price difference is really substantial, or you bought a lot of Girl Scout cookies.)
Ms. Tompkins dismissed that approach in a follow-up e-mail. “There really is no valid comparison here,” she wrote. “In other words ‘similar’ is not the same.”
She continued, “Girl Scout cookies are manufactured as authorized by Girl Scouts of the U.S.A. and are not sold in stores. Each Girl Scout council independently sets their own retail price. ”
Oh well. I guess I’ll just enjoy my Tagalongs with a cold glass of milk.
Do you think part of the cost of a box of Girl Scout cookies should be tax deductible?
Article source: http://bucks.blogs.nytimes.com/2013/04/10/girl-scout-cookies-as-a-tax-deduction/?partner=rss&emc=rss
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