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Charitable Contributions for Business
New rules extend deductions for food inventory

The amount of a business’s deduction for inventory contributed to a charitable organization is normally limited to the property’s adjusted basis.

Under the Katrina Emergency Tax Relief Act, businesses are allowed an enhanced deduction for the contributions of wholesome food inventory. This provision has been extended to donations made before December 31, 2007

This means businesses can deduct, in addition to the basis of the contributed property, up to half of the property’s appreciation, or two times the donated item’s basis, whichever is more.

Wholesome food is food that is intended for human consumption and meets quality and labeling standards imposed by federal, state, and local laws and regulations, even if the food is not readily marketable because of appearance, age, freshness, grade, size, surplus, or other condition.
 

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