In this note classical tools are used to examine the treatment of "gifts in kind" under the federal income-tax laws as they were but a few years ago, as they are today, and as they should be, given the objective that the law appears to be trying to achieve. It will be demonstrated that, under certain conditions, firms today can maximize profit after taxes by producing some output to be given to acceptable charities.
Gillis, Floyd E., and Vernon L. Smith. “An Economic Analysis of Contributions under the Income Tax Laws." Journal of Political Economy, 66.5 (1958): 432-439.
University of Chicago