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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