Dear Governance Matters,
I am the executive director of the Florida Native Plant Society, a not-for-profit organization. We have been offered a rent-free office. A for-profit business will give us two rooms of office space, which they usually lease out, as an in-kind donation.

Can this company write off its in-kind donation of office space to our non-profit on their tax return?

Thank you for your assistance.
K.

Dear K.,
Opinions expressed in the answers are not to be considered legal or tax advice. You should consult with your attorney or tax advisor before making decisions. With that in mind, here's what we have to say.

Corporations and individuals are allowed to take a tax deduction for expenses they have incurred, and must pay income taxes on income they have received.

Based on this concept, use of their space, at no cost, does not create a tax deduction for the business because it is not paying anything on your behalf, nor is it receiving revenues from you. If the company pays an expense for you, such as electricity, telephone, office supplies, etc., then it can write off these expenditures as a donation on its tax return rather than as a regular expense incurred in the course of business.

I hope this is helpful.

Anne, editor
Governance Matters "Ask the Experts"