Charitable gifts can be a deductible business expense if they are related to the business and they are made with an expectation of financial benefit to the business.
Specific Details
The parents reduced their taxable income by $5,000 by making charitable gifts as a deductible business expense. Since the parents income was taxed at the 30% tax bracket, the income reduction may decrease their income taxes by $1,500 ($5,000 x 30%).
Potential Savings
If you are in a combined (federal, self-employment, and state) tax bracket of 30%, you could reduce your taxes up to $300 for every $1,000 of income reduction by making charitable gifts as a deductible business expense.