Feeding America partner organizations are eligible for a number of tax benefits. Following is a summary of the effect current tax laws have on the treatment, under the Internal Revenue Code (IRC), of donations of appreciated ordinary income property when contributed by corporations to charitable organizations.
The general rule since 1969 states that a taxpayer who contributes appreciated inventory or certain other ordinary income property is permitted a charitable deduction only for an amount equal to the taxpayer's basis in the contributed property, not its fair market value.
In the 1976 Tax Reform Act, Congress further refined the statute to allow corporate donors an increased deduction, under certain circumstances, for contributions of ordinary income property to a public charity or to a private operating foundation.
Under IRC Section 170 (e) (3), a corporation is entitled to a deduction with respect to a contribution to a public charity or to a private operating foundation of appreciated property described in IRC Section 1221 (1) and (2).
An existing tax provision allows only qualified c Corporation taxpayers (retailers, restaurants and food manufacturers) to take a charitable tax deduction for donations of fit and wholesome food to non-profit charitable organizations that serve the needy.
The previous information should be used only as a guide. Donors are advised to consult with their tax advisor in applying the appropriate deduction.