Home Brewing and Tax Deductions?

Hey there,
I know this might sound crazy but hear me out...As far as I can tell in CA it is legal for a homebrewer to supply beer at a non-profit organizition's charity event (beer festival). The beer would obviously be donated and I can not receive any sort of compensation. Now obviously I can't claim the beer as a tax deduction since I don't possess a license to make beer. Could I claim the supplies (hops, grain, yeast) as an "in kind" donation to a charity? I think it could compare to providing food to a charity event like a chile cook off. I would think you would/should be able to write off the cost of ingredients as a donation. Any CPA's out there? What do you think? Thanks. Al

You don't need a cpa, you need to contact the TTB directly.

Anything else is going to be idle speculation. More than likely nothing is deductable, because that would be a medium of exchange, I'm pretty sure it's irrevelant whether you are getting compensated for the beer, or the ingredients used to make beer. I don't think in their eyes there is a distinction.

The email addy is [email protected]

Pursuant to § 5053(e) any adult may, without payment of tax, produce beer for personal or family use and not for sale.

Technically you were not selling the beer, And everyone at a Beer Festival is your Brother!

Seems to me that if you can't sell it legally, then its fair market value is $0. But, as Revvy said, this is idle speculation. And, as with all legal matters, you should definitely contact the relevant authorities directly.

Pure speculation but I bet its not allowed as a deduction because that makes it too 'easy' to loophole the whole taxation of alcohol, etc...

But I love idle speculation!!

It would seem that if I bought something and then donated it to a charitable organization it would qualify as a deduction. Remember I am NOT claiming beer but rather grain,hops, yeast. I could equate it to chili...I don't have the proper license to sell chili. If I made a huge batch of chili for a non profit I would think I would be able to deduct the beef, beans, and whatever else went into the chili. It was money that I spent on products that went to a charity. I know I am probably higher than Charlie Sheen on this one.....

Sorry for bringing back an old thread but I am doing my taxes. I poured my homebrew at a charity event last year. You can read about it here...https://www.homebrewtalk.com/f14/pinnacle-my-homebrewing-experience-269499/
Anyways I used the event to sell brewery t-shirts and did very, very well. It would seem that since I conducted business(sold t-shirts) that some parts of my booth would be legally eligible for tax deductions.

Maybe you could offer the IRS Auditor a Homebrew???? LOL

Phunhog said:

Sorry for bringing back an old thread but I am doing my taxes. I poured my homebrew at a charity event last year. You can read about it here...https://www.homebrewtalk.com/f14/pinnacle-my-homebrewing-experience-269499/
Anyways I used the event to sell brewery t-shirts and did very, very well. It would seem that since I conducted business(sold t-shirts) that some parts of my booth would be legally eligible for tax deductions.

Click to expand...

Are you reporting the t-shirt income on your return? If so, then any expense related to the sales would be deductible.

Give the IRS a ring and ask them. While you're at it, go ahead and let them know that you distribute homebrew at public events while you sell shirts advertising your homebrew as a business.

Then just sit back and wait for your new friends from the IRS to show up. Bring out your taps and make sure you have a tip jar sitting out because those guys will definitely give you a tip of something somewhere.

PIGMAN said:

Are you reporting the t-shirt income on your return? If so, then any expense related to the sales would be deductible.

Click to expand...

Absolutely! I have also reported and paid my state sales tax for selling the shirts.

ReverseApacheMaster said:

Give the IRS a ring and ask them. While you're at it, go ahead and let them know that you distribute homebrew at public events while you sell shirts advertising your homebrew as a business.

Then just sit back and wait for your new friends from the IRS to show up. Bring out your taps and make sure you have a tip jar sitting out because those guys will definitely give you a tip of something somewhere.

Click to expand...

I'm sorry maybe I didn't make myself clear. The event I poured my beer at also had a competition, actually two competitions. One was for individual beer and the other was People's Choice for all around brewery. Unless I am mistaken beer can be removed and served for competitions. I don't think the IRS cares what I put on my t-shirt as long as they get any taxes from the sale of the t-shirt.

ooops double post

Phunhog said:

Absolutely! I have also reported and paid my state sales tax for selling the shirts.

Click to expand...

Then all of your expenses related to the sales are deductible, including your cost for the shirts, and the fee for the booth if any. You would file everything on Schedule C. And yes, IRS doesn't know or care what's written on your shirts.

ReverseApacheMaster said:

Give the IRS a ring and ask them. While you're at it, go ahead and let them know that you distribute homebrew at public events while you sell shirts advertising your homebrew as a business.

Then just sit back and wait for your new friends from the IRS to show up. Bring out your taps and make sure you have a tip jar sitting out because those guys will definitely give you a tip of something somewhere.

Click to expand...

It would seem that if your blogs bring in any income that you too could write off homebrewing expenses. Completely legal and legitimate.

Say you donated the ingredients and that beer was made AFTER the donation.

If you owned a homebrew shop I would say yes, if not than don't bother.

I would donate the raw materials and get a receipt from the group showing the in-kind donation. The processing of said materials is then something you do for them for no-fee. I don't think there's anything to stop you from doing that provided in-kind donations to that charity are allowed.

My 2 cents.
Jaz

P.S. I am not a tax attorney and do not play one on TV. In addition, I did NOT stay at a Holiday Inn Express last night!