Abstract

When the donation is offered by in－kind, more tax considerations are requested rather than the case of cash donation. This study reviewed the tax revision history about the pricing of in－kind donation. This study also analyzed the weakness of the current individual tax provision about the pricing of in－kind donation. According to this analysis, the individual tax provision about pricing of in－kind donation (enforcement article 81 section 3) is different from the corporate tax. Besides this inequity, current provision of individual tax is unfavorable for double entry business operator with regarding to qualified donation. This result is in discorded with the purpose of revision on individual tax enforcement article 81 section 3. National Tax Service explains that they revise the provision from pricing by the book value to pricing by market value in order to encourage donation by in－kind. The donation amount(the deduction is restricted by tax law) is generally decided according to the process of bookkeeping by double entry and tax reconciliation. In this case, the in－kind donation is less unfavorable when it is priced by the book value than by the marker value. For that reason, the corporate tax law states that qualified donation in－kind must be appraised by the book value. However, current individual tax law(enforcement article 81 section 3) states that qualified donation in－kind must be appraised by the market value(if the book value is higher than the market value, then take the book value). Accordingly, the individual business operator would face an unfavorable situation than the corporate business operator in case of that they donate by in－kind. Therefore to remedy this problem and to improve the equity and coherence of the regulation, it is necessary to reform the individual tax law(enforcement article 81 section 3) with the same contents of the corporate tax. In addition to this proposal, it is necessary to praise the donation in－kind by the marker value when the donation is executed by the non business operator.

Keywords

• in－kind donation
• tax deduction limit
• consistency
• pricing

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