Are in-kind donations from my S-Corp tax-deductible in any way?

Question

I have an S Corp that each year, sponsors a film festival by creating their website for free. In return, they print our logo in their program guide. Last year, I gave them 80 hours of work building their website, in exchange for sponsor status. Is this deductible at all? I also do web development work for the non-profit organization that holds the film festival throughout the year. I offer them (and my other non-profit clients, in fact) an hourly rate that is discounted at 25% less than my for-profit hourly rate. Is that deductible? I have been doing this for years and have never deducted any of it. I am preparing my 2011 return right now (had an extension) and thought I might check about this.

Answer 1

You might have a case if the sponsorship & logo placement had an ascertainable FMV, but you would have to declare that as income since they paid you this for your efforts, and then deduct it as an equal expense for the time you invested producing their website. So it is a wash !

You have been doing the correct thing by not deducting any of it because gifts of your personal time is never a charitable donation. When you give something of value, you make a charitable contribution, but if you donate your time, your just doing something you enjoy. The IRS doesn't tax you on what you would have made or allows you to deduct foregone wages. They tax you on what you actually do make in a bonafide exchange.