Originally Posted by Temujin
I guess they could count off full price as a charitable donation, for tax purposes.
I don't know the tax laws in Canada, but I do wonder how this works in the U.S. So I'll think it through: If you donate $10k worth of stuff here, you'd of course only get a $10K deduction, not a $10k credit...so, assuming 30% marginal tax rate for ease of calculations, in real terms it's worth about $3k. If they sold at half-price, say, they'd get $5k from their customers. Income tax, however, would take another chunk. The tax rate being 30% (as stipulated above), however, would not make it rational - I don't think - for them to make the donation, since they would still net $3500 -- a good % above the $3k donation gain. This is not counting, however,, the subjective value to their brand name that comes with never making such discounts ("luxury goods" and all that; similar reasoning, I assume, for Zegna, Incotex and other brand names having tags ripped off before sales at Daffy's). Basically, this seems weird to me. Donating instead of selling only makes sense when the sales price reduction would be pretty drastic - 50% or greater, likely - and when the "luxury" status of the company is valued very very highly. [EDIT: one thing to keep in mind is that the store may also be able to take an accounting write-off for any "loss" by donating. I'm not really familiar with it -- would seem like double-counting, but I don't know the details of this type of transaction. It's possible this write-off isn't available when you sell at a discount. I can't say for sure, but the availability of this type of "loss", and the lack of any transaction costs associated with having to deal with a sale and its headaches are both things to consider as well]