Tax benefits of recycling
If they charge a fee to accept an item, it's reasonable to assume the item has insignificant value, so the only tax-deductible bit would be the money you donated to their charity. What you describe sounds like a fee for service, not a charitable donation. The organization should provide a fee breakdown to show what percentage (if any) of the fee is a deductible contribution. There could be some additional PA-only tax benefit, but I didn't come across anything in my brief search. They are certainly only suggesting that the money you pay to recycle the bulbs is tax deductible as a donation, assuming that they are indeed a 501(c)(3) non-profit. Donations of goods are only deductible at fair market value. Light bulbs that no longer light up have no market value, so only the payment could possibly be deductible. If a business incurs expenses in the process of its trading, generally those expenses are deductible. Disposing of waste is generally held to be a deductible expense.
This will always be the case unless the tax relief is more than the expenditure, which it never is. There are some ways in which this can become worth it: if the thing you are spending the money on would actually be useful, of it you might be able to sell it for more than four dollars later - or if you can claim a government grant or similar for more than four dollars. And at the level of corporate finance it can get more complicated. But otherwise, No. Do Alice and Bob have to figure out the fair market value of their services and report that as income or something? Yes, exactly that.  See Topic 420.   Note that if the computer program is for Bob's business, Bob might be able to deduct it on his taxes.  Similarly, if the remodeling is on Alice's business property, she might be able to deduct it.  There might also be other tax advantages in certain circumstances. Most items used in business have to be depreciated; you get to deduct a small fraction of the cost each year depending on the lifetime of the item as per IRS rules. That is, you cannot assume a one-year life for an electronic item  even if it will be obsolete in three months.  Some items can be expensed; you get to deduct the entire cost in the first year but then if you don't stay in business, e.g. you get a job paying wages and are no longer self-employed, you have to recapture this and pay taxes on the amount recaptured in the later year.  With respect to consumer-type electronics such as an iPad or laptop, it helps to have a separate  item for personal use that you can show in case of an audit. You're last paragraph sums up what I mean exactly. Businesses will continue to make investments that try think make sense. Taxes have an pact on what makes sense. This combo is what we should be discussing. Thanks for adding to the conversation. What you are looking for is a 1031 exchange. https://www.irs.gov/uac/like-kind-exchanges-under-irc-code-section-1031 Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free. You may also sell your house for bitcoin and record the sales price on the deed with an equal or lesser amount that you bought it for. The CPA's mention of $2,500 is probably referring to the recently increased de minimis safe harbor under the final tangible property regulations (used to be $500) without an applicable financial statement. The IRS will not challenge your choice of expense or capitalization on amounts on or below $2500 if you elect the de minimis safe harbor election on your return. However, you must follow whatever you're doing for your books. (So if you are capitalizing your laptops for book purposes, you would also need to capitalize for tax purposes). Section 179 allows you to expense property that you would have otherwise have had to capitalize and depreciate. Section 179 can be annoying, especially if your LLC is treated as a passthrough, because there are recapture provisions when you dispose of the asset too early. For the tax return preparer, it makes the return preparation much more simple if there are no fixed assets to account for in the first place, which is quite possible if you are expensive all items/invoices less than $2,500. They do give tax breaks for efficient furnaces, tankless water heaters, even LED lights. Homeowners can use their interest deduction to buy such items. There have been huge tax breaks for electric cars too.  Are you serious right now? I ran a plastic recycling plant with my dad about 10 years ago and the techniques or operations are still the same. The beauty of the plastic industry is that the market is extremely under served. The market is so under served that many of the big processors across the country will lease the machinery to you to process the material they send to you and let you pay for the machinery by processing some of their inventory for them. Recycling is a lucrative industry. I still have my old business plan if you are interested. You have a major player there in Northern Cali. Let's talk trueoutlawconsulting@gmail.com My dad owned a steel Drum / barrel recycling company where we would get barrel from food companies and recondition them. Sometimes we would get drums from one company for free and they would call us to buy drums, many times we would sell them the same drums that we got from them for FREE. That's the beauty of recycling.   After some time we started doing plastic drums and we had to find a way to salvage the plastic drums that we were not able to refurbish. So we started contacting plastic companies and started talking to a company in Middle Tennessee.    He was a huge plastic processor that was shipping hundreds of thousands tons of plastic regrind every week. He was from India and had a huge plant about 70 miles from Memphis were I was living. He would process the plastic rods or shanks here in the U.S. and ship them too be made into products in India. I was in the process of securing a processing machine from him, one from a company in Northern California, and one from a company in Florida. All three where going to place a processing machine in my dads plant in Memphis and create a coast to coast pipeline with Memphis as the center point. They where going to let us pay for the machinery by paying us to process a percentage of their plastic since much of it was coming through Memphis. That way all they had to do was ship the material once it arrived from our plant. Since Memphis is the gateway to the west and a main truck route it was perfect.   This type of arrangement is easy to make if you can convince the major players that you can deliver their product as promised. I also made arrangements with the processor close to me to relocate 2 of his employees to Memphis to manage the equipment until we got failure with the equipment and act as liaison for him. He was agreeing to everything I asked because it would have relieve production pressure off his employees and help him with his bottom line.   Make sure you investigate the type of machines you need to process the many types of plastics your processor needs or wants. There are different types of plastics and different ways of processing it.   #1 – PET (Polyethylene Terephthalate) ... #2 – HDPE (High-Density Polyethylene) ... #3 – PVC (Polyvinyl Chloride) ... #4 – LDPE (Low-Density Polyethylene) ... #5 – PP (Polypropylene) ... #6 – PS (Polystyrene)  I also know that California has a lot of air quality laws. What I would do is get to know your local EPA reps and run your plans by them, they will be able to tell you all you can and can't do. Also you processor is going to want to see your Feasibility Study and business plan before he does this type of arrangement. Once you let me know if this is something that you are still interested in doing I will send you my old business plan.     Here is a video to really get an idea of what's involved https://youtu.be/vAr4BZM_Tzk It's called bartering and the IRS has a page titled Four Things to Know About Bartering. The summary is -  The bottom line is this is taxable. Yeah, the VAT adds more fairness between who gets the taxes, but is only offset by it being more complicated and needing more bureaucracy. I think it's an interesting idea. If I were a policy analyst I'd like to see what costs are vs. benefit. There is a positive not being mentioned above: the depreciation vs your regular earned income. Disclaimer: I am not a tax attorney or an accountant, nor do I play one on the internet. I am however a landlord. With that important caveat out of the way: Rental properties (and improvements to them) depreciate in value on a well-defined schedule. You can claim that depreciation as a phantom loss to lower the amount of your taxable regular income. If you make a substantial amount of the latter, it can be a huge boon in the first few years you own the property. You can claim the depreciation as if the property were new. So take the advice of a random stranger on the internet to your accountant/attorney and see how much it helps you. If the building has no income, it also probably has minimal expenses. The heat, water and electricity costs are nearly zero. They are letting the value depreciate, and taking it off the taxes. I also suspect the condition of the building is poor, so any effort to make the building productive would be very costly. Many cities combat this by setting the tax on empty buildings or empty lots at a much higher rate. Or they set the value of the property at a high valuation based on what it could generate. Sometimes this is only targeted at some sections of the city to encourage development. They also offer tax breaks when the owner of a house has the house as their principal residence. "If this is an issue of opportunity cost then there is a benefit. Mortgage interest rates are extremely low, low enough that they can effectively be used to indirectly fund investments. If one stores equity in a house, ie ""pays it off"", then that wealth returns only the rate of growth of the house less expenditures. If one borrows against the house to fund investments, then the above stated returns which on average exceed the mortgage interest rate can be augmented by the investments, yielding a greater return. The tax benefit is more of a cherry on top. If one is using this as a justification to spend then it is frivolity." I wrote a detailed article on Tax Loss Harvesting to show the impact on returns.  For my example, I showed a person in the 15% bracket. In years with no loss, they trade to capture gains at 0% long term rate, thus bumping their basis up. In years with losses, they tax harvest for a 15% effective 'rebate' on that loss.  I showed how for the lost decade 2000-2009, a buy and hold would have returned -1% CAGR, but the tax loss harvester would have gained 1% (just 1% for the decade, not CAGR), ending the decade with no loss.  As one's portfolio grows, the math changes. You can only take $3000 capital loss against ordinary income, and my example relies on the difference between taking a gain for free but using a loss to offset income. Note, the higher earner would take gains at 15%, but losses at 25%, but only for the relatively small portfolio. The benefit for them is to use loss harvesting to offset gains, less so for ordinary income.  As the other answer state, Wealthfront can aid you to do this with no math on your part.