Authored By Valerie Kenis
Contact 847.441.8800
Email: vkenis@weisscpa.com

Saving Money, Saving Lives: Exploring the Enhanced Charitable Food Deduction

Did you ever stop to realize that America throws out more than 1,250 calories per day per person, or more than 400 pounds of food per person annually? Restaurants and other food-related businesses are among the most wasteful concerns, routinely disposing of immeasurable quantities of fresh food items that could easily be donated to people in need. Such donations can even yield significant tax benefits for those businesses, provided they meet the criteria for what the IRS calls “apparently wholesome food” donations.

The Internal Revenue Code defines “apparently wholesome food” as “food intended for human consumption that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions.”

Once an item has been deemed as “apparently wholesome,” the donating business must determine the amount they are able to include in their deduction. Generally, that’s calculated by taking the lesser of two options: 1) the cost paid for the food plus half the difference between its fair market value and cost; or 2) double the initial cost basis. The smaller of those two amounts may then be taken as a deduction on the individual tax return.

This deduction can serve as a great tool to those who are looking to chip away at the amount of tax they owe at year’s end. It’s also a great way to make a real difference in the lives of people who need it most. Hunger relief organizations from local food banks to national charities like Feeding America rely on such donations to fulfill their mission to fight hunger throughout the country and world.

It’s just one example of tax planning tools and strategies Weiss & Company employs on behalf of clients interesting in helping their communities as well as their bottom lines. For further information about the tax benefits of charitable food donations, check out the articles linked below.

This post was contributed by Val Kenis, a Staff Accountant in our accounting and advisory services department. You can reach her at 847-441-8800 or by email at vkenis@weisscpa.com. Val invites to read two articles she used in preparing this post: “Wasted: How America Is Losing up to 40 Percent of It’s Food from Farm to Fork to Landfill,” by Dana Gunders, Natural Resources Defense Council; and “Enhanced Charitable Deduction for Food Inventory,” by James Riner, Strategic Finance Magazine.


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