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View Full Version : Folding and US Income Tax Deduction




daveL
Aug 12, 2003, 02:13 PM
I've been folding for a while on two machines, and I wondered, since this effort is in support of a non-profit University study, is the % of your machine time used to fold allowable as a tax deduction? I don't really see how it *would not* be deductable, but I haven't seen anyone else mention it.



Mr. Anderson
Aug 12, 2003, 02:15 PM
hahaha! And how would you be able to classify this? Its hard enough at times to get a tax break on a home office, but deducting CPU cycles? :p

D

daveL
Aug 12, 2003, 02:37 PM
Originally posted by Mr. Anderson
hahaha! And how would you be able to classify this? Its hard enough at times to get a tax break on a home office, but deducting CPU cycles? :p

D
Well, IRS is usually satisfied with a usage log, like you would keep for a vehicle. You could simply track Folding cpu usage and record a daily average in a log file. At the end of the tax year, you'd a grand total that indicated, very accurately, how much of your machine was used for Folding.

jxyama
Aug 12, 2003, 02:37 PM
i think it might be *possible* but probably not very realistic. you'll need to quantify the CPU cycles used and the monetary value of them... then you have to classify how they fall under donations. i imagine it'd be pretty tough because folding, SETI, et al. are designed to run when you are not using your CPU cycles - by definition, you aren't really donating something of value to you. if the CPU cycles were of value to you, those programs wouldn't be running to begin with...

i'm not saying those donated cycles are worthless - they aren't, they are being used for a very worthy cause. but it would be hard to convince IRS that they are of substantial value to you to merit tax deduction.

Mr. Anderson
Aug 12, 2003, 02:39 PM
I think if you tried that all you'd end up doing is flagging yourself for an audit.

Anyone willing to see if my theory is correct? ;)

D

daveL
Aug 12, 2003, 02:49 PM
Originally posted by jxyama
i think it might be *possible* but probably not very realistic. you'll need to quantify the CPU cycles used and the monetary value of them... then you have to classify how they fall under donations. i imagine it'd be pretty tough because folding, SETI, et al. are designed to run when you are not using your CPU cycles - by definition, you aren't really donating something of value to you. if the CPU cycles were of value to you, those programs wouldn't be running to begin with...

i'm not saying those donated cycles are worthless - they aren't, they are being used for a very worthy cause. but it would be hard to convince IRS that they are of substantial value to you to merit tax deduction.
Yes, but if I didn't make the capital investment in the machine to begin with, there would be 0 spare cycles to donate.

When it comes to depreciating a PC used for business, IRS considers it to have a 3 year life. If you use it for Folding, you should be able to make a case that each year you can take your Folding % * (PC price/3) as the deductable amount.

As far as audits go, it's all a crap shoot anyway. Given my formula above, we aren't talking about a huge deduction. Of course, you'd never know until you try. I guess if hundreds of thousands of tax returns starting taking this deduction, IRS might take notice :)

FriarTuck
Aug 12, 2003, 02:52 PM
Somebody page mcrain. Isn't he the taxman?

Mr. Anderson
Aug 12, 2003, 02:55 PM
But is folding your business? You chose to fold, not having it forced on you.

Therefore you're saying the that gov't should pay you for donating you computer's time? If you volunteer for something, do you try and get a tax deduction for that?

D

jxyama
Aug 12, 2003, 02:56 PM
well, i understand the capital investment thing, but it's sort of voluntary donation... no one buys a computer just to fold..?

i'd ask the folding team to see what's up. isn't there a requirement that the organization you donate to must be qualified to offer tax deductions? (that being a non-profit isn't enough...) otherwise, anyone can arbitrarily set up a non-profit and "donate" all of his income to avoid paying taxes. (i realize that's a bad simplification - it takes certain kind of logistics to set up a non-profit... but you see my point?)

daveL
Aug 12, 2003, 03:10 PM
Originally posted by Mr. Anderson
But is folding your business? You chose to fold, not having it forced on you.

Therefore you're saying the that gov't should pay you for donating you computer's time? If you volunteer for something, do you try and get a tax deduction for that?

D
Nobody makes me write a check to the United Way, or give some used goods to the local "thrift shop", but it's still a charitable deduction and has nothing to do with my business.

jxyama
Aug 12, 2003, 04:18 PM
sure, donations need not be "business" or "forced" to qualify for tax deductions...

but the issue here is accountability and valuation. can you accurately keep track of the cpu donations in an accountable way? if you write a check, that leaves a paper trail. not sure how to do a similar thing for cpu cycles. also, how to value what you donated..? can you accurately evaluate how much those cpu cycles are worth?

as i mentioned before, i don't think you can say, during business hours, i earn $$$ amount per XXX cpu cycles so if donate so many cycles, it's worth so many dollars. because by definition, the cpu cycles you are donating are "unused" ones. the reason they were donated to begin with is because you weren't using them...

again, i'd check with stanford/folding team.

by the way, possibly related to tax deduction, you have to agree that anything that come of your participation in folding/seti/etc. is not personally attributable to you. you cannot claim patent or credit for having folded a particular protein that leads to a breakthrough in medical progress or having analyzed a particular signal confirming the existence of an extraterrestrial intelligence... so i'm not sure the same applies to "donations" of cpu cycles. i'm not sure if you can claim it as such...

Powerbook G5
Aug 12, 2003, 04:51 PM
I don't think I'd want to try anything that I am unsure of when dealing with the IRS--those guys mean business.

Vlade
Aug 12, 2003, 05:04 PM
Is it really worth the risk? Anyways, does anyone know how much you would save if you did this?

Peyote
Aug 12, 2003, 05:12 PM
Originally posted by jxyama
sure, donations need not be "business" or "forced" to qualify for tax deductions...

but the issue here is accountability and valuation. can you accurately keep track of the cpu donations in an accountable way? if you write a check, that leaves a paper trail. not sure how to do a similar thing for cpu cycles. also, how to value what you donated..? can you accurately evaluate how much those cpu cycles are worth?

as i mentioned before, i don't think you can say, during business hours, i earn $$$ amount per XXX cpu cycles so if donate so many cycles, it's worth so many dollars. because by definition, the cpu cycles you are donating are "unused" ones. the reason they were donated to begin with is because you weren't using them...

again, i'd check with stanford/folding team.

by the way, possibly related to tax deduction, you have to agree that anything that come of your participation in folding/seti/etc. is not personally attributable to you. you cannot claim patent or credit for having folded a particular protein that leads to a breakthrough in medical progress or having analyzed a particular signal confirming the existence of an extraterrestrial intelligence... so i'm not sure the same applies to "donations" of cpu cycles. i'm not sure if you can claim it as such...




What if I have a car, that I'm not using. It's just sitting in my garage not being used. Just because I don't use it, does that mean it doesn't have value? Of course not, which is why if I gave it to the Salvation Army, I could get a tax break.

Tax breaks for charitable gifts and acts are rewards. By donating computer cycles, you are giving something to a nonprofit organization. I don't consider cycles to be a purely ethereal type of thing. It's not the same thing as donating your time to a cause. You are granting the organization the right to use your computer for their cause when you are not using it. The units that your computer processes have an effect on your computer, albeit very small. The more units you process, the more wear and tear on your processor, hard drive, memory, etc. You have the folding software on your computer, this takes up hard drive space (I don't know how much that is, however). If your computer is constantly in use (either your use or folding) is it not using more electricity when when it is processing these units? My point here is that this isn't simply unused time. There are tangible, consumable elements that are needed to fold (even if they are minute).

jxyama
Aug 12, 2003, 05:54 PM
i didn't mean to imply that that cpu cycles that would otherwise be unused are "worthless." taking your car example, what i mean is this:

say you run a taxi business, strictly running by appointments. let's say you can earn $20 an hour for the taxi service. if you decide you rent your taxi to a charity for the time you have no existing appointments or any potential ones (say when you are asleep - you can't drive when you are sleeping), i am not sure if you can claim that you are "donating" $20 an hour for that time you let the charity use your taxi... only because you wouldn't be earning that $20 an hour anyway...

i could be completely wrong, but that's my feeling.

Doctor Q
Aug 12, 2003, 06:17 PM
If you bought a computer and donated it to Stanford for use in the Folding project, I would expect it to be tax deductible.

What if you bought the same computer, kept it at home, and used it for nothing but Folding? Could you consider the cost of purchase and the cost of operation and cost of upkeep as tax deductiions? I don't know.

What if you bought the same computer, kept it at home, and used it every other day for Folding?

What if you had two processors and somehow made sure one was always Folding and the other never was?

These questions could drive you and your tax accountant crazy!

daveL
Aug 12, 2003, 06:19 PM
Originally posted by jxyama
i didn't mean to imply that that cpu cycles that would otherwise be unused are "worthless." taking your car example, what i mean is this:

say you run a taxi business, strictly running by appointments. let's say you can earn $20 an hour for the taxi service. if you decide you rent your taxi to a charity for the time you have no existing appointments or any potential ones (say when you are asleep - you can't drive when you are sleeping), i am not sure if you can claim that you are "donating" $20 an hour for that time you let the charity use your taxi... only because you wouldn't be earning that $20 an hour anyway...

i could be completely wrong, but that's my feeling.
You are correct, you cannot deduct your time, in this case, but if in your spare workday cycles you transport old folks to/from the hospital for the Red Cross, as an example, you certainly can deduct your vehicle expenses.

MrMacMan
Aug 12, 2003, 06:37 PM
Originally posted by Mr. Anderson
But is folding your business? You chose to fold, not having it forced on you.

Therefore you're saying the that gov't should pay you for donating you computer's time? If you volunteer for something, do you try and get a tax deduction for that?

D

My dad is getting a small tax deduction for donating his car to a charity.

What are you gonna save?

Lets see total CPU usage for folding/cost of computer.

So say your computer lasts 3 years and it was $1000 (math's sake)

You ran folding overall at 50% for the total of 3 years you could say you donated your computer to folding...

$500/3 year if you want per year or $500 after 3 years...

Possible?

Maybe.

mstecker
Aug 12, 2003, 06:53 PM
Genius!

What a great idea. Good think I've got a few days until my extended extension are due.

M.

Sun Baked
Aug 12, 2003, 07:00 PM
Originally posted by daveL
I've been folding for a while on two machines, and I wondered, since this effort is in support of a non-profit University study, is the % of your machine time used to fold allowable as a tax deduction? I don't really see how it *would not* be deductable, but I haven't seen anyone else mention it. Try it, you'll love the IRS's proctologist. :p

Not all non-profits are charities, and not all charities are classified as charitable organizations by the IRS.

The IRS is constantly adding and dropping charities from their list.

Which is why some of the people that donate their cars and/or money to charities may find out later that the charity lost their status with the IRS, or was a money making scam to begin with.

phrancpharmD
Aug 12, 2003, 07:48 PM
The IRS has a "standard deduction" for charitable donations - you can claim $250 WITHOUT needing any receipts; a "written acknowledgement" (receipt) is needed for amounts >$250, and donations >$5000 require a qualified written appraisal. So, if your "donation" to folding is worth up to but not exceeding $250/year, you can most likely just go ahead and do it without worrying about documentation (assuming you make no other charitable donations throughout the year). If you believe it is worth more than $250 a year, consult with a tax professional to figure out what exactly you need and then contact the Folding administrators to see if you can get what you need from them.