Enhanced Inventory Donations Available for C Corporations

Published on February 15, 2015 by Barnes Dennig in Tax Services, Wholesale / Distribution

While the enhanced deduction associated with contributions of food inventory made by taxpayers that are not C Corporation expired on December 31, 2014, there are still valuable deductions available for the donation of inventory by businesses going into 2015.

Charitable Contribution of Inventory

Under section 170(e)(3)(A), a charitable contribution of inventory by a C Corporation may be eligible for an enhanced deduction if it meets the following requirements:

1. The use of the property by the donee is related to the purpose or function constituting the basis for its exemption under Section 501 and the property is to be used solely for the care of the ill, the needy, or infants;
2. The property is not transferred by donee in exchange for money, property, or services, and
3. The taxpayer receives a written statement from the donee representing that the use and disposition of the property will be in accordance with the provisions above.

For regular C Corporations, the deduction is equal to the cost of the inventory donated, plus half the difference between the cost and fair market value, not to exceed twice the cost. Reach out to a tax representative at Barnes Dennig to learn more about enhanced inventory donations and to see if your company may be eligible to receive benefits from this legislation.

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