Wholesome Food Contribution Rules
For those of you involved mainly in the grocery or restaurant business there is an a great tax deduction for donating to charitable organizations wholesome food that you no longer will sell due to your own internal standards. The points are as follows:
1. A taxpayer engaged in a trade or business is eligible to claim an enhanced deduction for donations of food inventory.
2. The enhanced deduction equals the lessor of (a) what you paid for the food (basis) PLUS half of the ordinary income that would have been recognized if the property were sold at fair market value (FMV) at the contribution date, or (b) twice the property’s basis.
3. To qualify for the deduction a contribution of food inventory must be apparently wholesome food – i.e. meant for human consumption and meeting certain quality and labeling standards.
4. For a taxpayer other than a C Corporation, the aggregate amount of contributions of apparently wholesome food that may be taken into account for the tax year cannot exceed 15% of the taxpayer’s aggregate net income from trades or businesses from which the contributions were made.
As we approach year end this is something to keep in mind to get that extra tax deduction and you will also be helping out those less fortunate as well.