Understanding Charitable Deductions for Contributing Your Restaurant’s Food Inventory

3 Min Read By Phil Hofmann

Last December, Congress passed and the President signed into law the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The PATH Act makes permanent several temporary tax provisions commonly known as extenders.

One extender particularly relevant to restaurant businesses is the enhanced deduction for food inventory under IRC section 170(e)(3). The enhanced deduction equals the lesser of (a) cost plus half of the property's appreciation, or (b) twice the property's cost.

The new law reinstates and makes permanent the enhanced deduction for contributions of food inventory made after December 31, 2014. This applies to any taxpayer engaged in a trade or business, whether a C corporation or not.

The permanent deduction is good news, but the new law also made some modifications that are even better news for restaurants. 

The permanent deduction is good news, but the new law also made some modifications that are even better news for restaurants. First, for years beginning after…