I agree with Karen

We submit taxes on all sales ( used and new parts and accessories, and used bikes that are refurbished or ‘as-is’ project bikes)

Deb

Deb Salls

Executive Director

Bike Works Program Classrooms and Offices

3715 S. Hudson Ave Suite #111 (Lower level)

Seattle, WA 98118

206-695-2522 Main line

206-695-2607 Direct line

Bike Works Community Bike Shop
3709 S. Ferdinand St.
Seattle, WA 98118
206-725-8867

http://www.bikeworks.org

"Building sustainable communities by educating youth and promoting bicycling."

From: Thethinktank [mailto:thethinktank-bounces@lists.bikecollectives.org] On Behalf Of Karen Overton
Sent: Friday, June 05, 2015 11:56 AM
To: The Think Tank
Subject: Re: [TheThinkTank] Accounting for sales of donated bikes

Hi Michael,

Recycle-A-Bicycle's accountant has informed us that income on all sales is required because it is a transaction of cash for goods, whether used of new.

Karen

On Fri, Jun 5, 2015 at 2:50 PM, Michael Kirk <michael.john.kirk@gmail.com> wrote:

At the Bicicocina in Los Angeles we take care to separate new parts (sales) from donations associated with using old donated parts/frames. We collect sales tax on these new parts, not on the donations for working with used parts / bicycles.

So, someone comes in and needs a new tube and a used crank. We'll charge them $5 for the tube, and suggest a $3 donation for the crank. We pay sales tax only on the $5 for the tube, and the $3 (or whatever the client agrees to donate) is a non-taxed donation.

We treat donated frames, aka project bikes, the same way. Donations suggested for a project bike are typically between $50-$150. It's worth noting that our project bikes are ineed *projects*. Clients typically have to work 4-10 hours to get them in safe working condition. It's pretty rare that you can just show up and find a 100% working bike.

I acknowledged that there is some careful language around all of this, but it can actually be a helpful thing to communicate to our clients given that we don't typically turn anybody away for lack of funds. (though people who come in repeatedly needing a "free bike" are effectively turned away if we suspect they are just selling them.)

On Fri, Jun 5, 2015 at 11:11 AM, Martin, Eric Vance <evmartin@indiana.edu> wrote:

Thanks everyone for responding.

My question is whether, in the U.S., you call the sale value of donated bicycles a donation or business income.

For example, if the former, it could contribute to meeting a public support test.

Of course we pay taxes on sales.

On Jun 5, 2015, at 11:56 AM, Angel York <aniola@gmail.com> wrote:

Assuming that you're run under a nonprofit, I think that if people give you bikes, those are donations. If people buy the bikes, I think that's a donation as well and I'm not sure they have to pay taxes. I would call the IRS to confirm.
On May 23, 2015 7:33 AM, "Martin, Eric Vance" <evmartin@indiana.edu> wrote:
Clarification: I don't mean anything to do with sales taxes, which we pay on everything we sell. I mean, is this effectively a (cash) donation? Would it be evidence of public support for the IRS?

> On May 23, 2015, at 10:17 AM, Martin, Eric Vance <evmartin@indiana.edu> wrote:
>
> People give us bikes, and we sell them. This is our main income.
>
> Should we be treating this/reporting this as related business income or as a donation (realized FMV of an in-kind donation)? What do you guys do?
>
> We have a fiscal agent. Let's say the answer does not affect their public support test.
>
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