Grocery stores can benefit from contributing food inventory to charity
Nov 21, 2011
Grocery stores are allowed to take a charitable deduction for contributing food inventory to charities. For example, grocers might donate hamburger buns that are about to expire to a soup kitchen.
But beware. While some grocery stores outright miss the opportunity to take the deduction, others do not properly document their contribution, reducing the chance to qualify for the maximum tax deduction.
The IRS recently clarified the rules surrounding noncash charitable contributions of food inventory. It is important to remember the following when you make a donation of food inventory:
- You must be able to substantiate the fair market value of your donation. Wholesale prices, trade discounts and best-if-sold-by dates are some factors that go into properly valuing the contributed inventory.
- You must file Form 8283 if the fair market value of your deduction is $5,000 or more.
Grocery stores can benefit greatly from the charitable donation of food inventory. But you must handle the donation thoroughly and correctly to qualify for the maximum tax deduction.
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