According to my reading, the tax code makes a big differentiation
between donation of equipment and donation of inventory (i.e., the
jewelry you make). My understanding is that if you donate something
that you could have sold in the normal cost of your business, the
only deduction is your cost (inventory valuation) of the piece. IF
you pay yourself (or someone else) a salary (and pay taxes on that
salary and receive a regular paycheck) out of the biz, then the cost
of time is calculated into the inventory valuation of the piece.
However, if you do NOT pay yourself a salary, then the only inventory
valuation is the cost of materials, which you’ve already accounted
I think that most artists who donate their work to charity see it as
"free" (ha!) advertising within the community they are trying to
reach. The publicity can be good and the likelihood of getting
commissions for other work as a result of the donation is part of the
equation in deciding whether to do it. But I don’t think any of us
do it for the (nonexistent) tax break.
Donating old tools, clothing, books, etc., on the other hand, can
carry with it an additional tax break based on the fair market value
of the items in question and the charitable status of the
organization to which you’re donating. A good CPA who is experienced
in charitable giving can guide you through the decisions on that (as
well as on the donation of inventory issue).
Handcrafted and Unique Artisan Jewelry