Where does free services fit? (for example: providing free service to a pet rescue)

[castaneda_b]

My wife has an aquatic-therapy-for-dogs business.  She provides some free treadmill services for pet rescue organizations.  Does this free service count as an misc-expense or deduct from income (e.g. as a "rebate")?

[VolvoGirl · Accepted solution]

Sorry no.  She can't deduct it.  You can't deduct income you never received.  You will just have less income to be taxed on.  You take the loss by still deducting all your expenses but not your time or labor.  Unless you entered the full amount before the discount as income, then you can deduct the discount under Advertising or Misc Expense.