Tax deductions, charity and the One Laptop Per Child T-Mobile Hotspot Promotion

OK, not to be a grinch or anything, but there's a slight problem with the promotion for the One Laptop Per Child buy-two-give-one for $399 special. The concept is good--you get to keep one, and you get a tax deduction for donating the other. Here's the legal language from the site:

OLPC Foundation is a tax-exempt U.S. charitable organization. If you make a donation to OLPC Foundation and do not elect to receive an XO laptop, your entire payment will be treated by OLPC Foundation as a charitable contribution. For participants in the G1G1 initiative, to the extent your payment exceeds the fair market value of the XO laptop(s) you receive, you may be able to claim a charitable contribution deduction against your U.S.-source income. OLPC Foundation estimates that the fair market value of an XO laptop is $199.

So far, so good. But look carefully at the promotion and you'll see that your $399 is not only getting you two XO laptops. To sweeten the deal, T-Mobile is also throwing in a year's free Wi-Fi Hotspot access. And what a good deal that is:

T-Mobile HotSpot broadband Internet service is available at more than 8,500 locations throughout the United States. Your complimentary year of service is valued at more than $350!

In other words, more than $150 over the value of your charitable contribution, assuming you keep one of the laptops for yourself.

My guess is the OLPC folk would argue that your purchase only covers the laptops and that T-Mobile is providing the Wi-Fi itself at no cost to OLPC. However, you could you a similar argument to patch around the sponsored goodies offered at any number of charitable benefits ("You're only paying for the dinner and a contribution--Tiffany's giving you a free diamond ring on its own!"). The reason stuff like that reduces or eliminates the deductible amount: the IRS applies the relevant statute so as to make the pertinent factor the consideration received by the purchaser, not the cost of the item to the charity.*

Further weakening the exclusion: the OLPC website presents the computers+hotspot as a unified transaction--it's not just something T-Mobile is offering independently off-site, say, if you bring in a receipt. Let's face it--since the price of the OLPC laptop is normally $199 anyway, the only tangible financial incentive to take advantage of the promotion is the free wireless.

In short, the IRS could make a strong argument that only the people who donate both computers can take advantage of a tax deduction for the 2-for-1 OLPC purchase, in the amount of ($399 - $359.88, the retail value of the T-Mobile subscription).