Food Inventory Giving Incentive

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Food Inventory Giving Incentive
The food inventory giving incentive was enacted in 2006 as a part of the Pension Protection Act. This provision, which expired on December 31, 2007, permitted grocery stores, farmers, ranchers, small businesses, and restaurateurs to donate wholesome food for hungry Americans and have the same access as corporations to the enhanced tax deduction for contributions of food inventory. The provision extended the section 170(e)(3) deduction for food inventory to all businesses (not just C corporations). The provision extends a deduction equal to the lesser of (i) the taxpayer’s basis plus one-half of the difference between fair market value and basis, and (ii) twice the taxpayer’s basis in the contributed inventory. This incentive was temporarily in effect following passage of the Katrina Emergency Tax Relief Act (Pub. Law 109-73).

Current Status
A one-year extension of the food donation inventory incentive passed the House as a part of H.R.6049, the Renewable Energy and Jobs Creation Act, by a vote of 263 to 160. A two-year extension of the food donation inventory incentive is also included in the Senate “extenders package,” S.2886. The Senate Finance Committee is negotiating whether and how much of the legislation will be paid for with offsetting revenue raisers, and whether additional provisions will be included in the package.

Take Action
We encourage IS members to urge their members of Congress to extend the food donation giving provision. We have provided a sample letter. Note that this letter must be tailored to describe your organization before sending.

Background
The Pension Protection Act of 2006 (Pub. Law 109-280), signed into law on August 17, 2006, included a number of charitable giving incentives and reforms. The law provided several new tax incentives to encourage greater charitable contributions, including the enhanced charitable deduction for contributions of food inventory. IS has developed a detailed summary (PDF) of the giving incentives and reforms.

Last updated: June 4, 2008