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Question:

Our church just completed a major upgrade of everyone’s computers. The computers that were replaced were ancient by today’s standards. Rather than throw them out, one staff member suggested that employees take their old computers home. He also said that since the computers are old, we don’t have to worry about taxes. The church board is uncomfortable with this nontaxable suggestion.

Answer:

The tax code doesn’t make an exception for new versus old equipment. The fair market value of the old computers is fully taxable to employees and the church owes FICA taxes, too.

Call around to computer stores or surf the internet to find the appropriate FMV. And be sure to document your efforts. The only scenario in which no taxes would be due would be if the computers are so old that they have no value. 

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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