Volunteers for charitable organizations can deduct unreimbursed expenses. Selling items does not risk an organization's tax-exempt status if the revenue generated is used to promote the organization's exempt function and the applicable taxes are paid on any unrelated business income. UBIT is based on the corporate income tax rates. The IRS and NPOs have struggled with figuring out what is 'related' and what is not. There are organizational and regulatory reasons to be cautious about such arrangements.
Deductions only reduce tax liability on income that has actually been received.
Nonprofits are required to report 'excess benefit transactions' on Form 990. Please take a moment to give us feedback on this item. This link will open up an email to the editors, with some structured feedback questions. Otherwise, for comments about the content of this, or any other page on the site, please email the Editor . For comments about the functionality of the site, please email the Webmaster .