Food donation deduction

[paul7979]

Relatively recently I read an artcle in either PMQ or the other pizza magazine that addressed a few bills that would effect the restarant industry that were in front of our govenment. One bill specifically was up for renewal and addressed the deductions of food donated to charities. I have always just expensed the food donated but this article specifically addressed a bill that allows for a double deduction of the food cost. Does anyone on this forum know the article I am refering to or keep an archive of these magazines? I’ve done a quick online search and haven’t found it and could use a bit of help. The issue it was in might be current or go back as far as October as I have a stack of magazines I’m behind on reading. I’d love to get this info to my CPA before finalizing 2013’s taxes.

 

[royster13]

I thought it was to approved organizations versus across the board…

 

[royster13]

I just found this… http://www.foodtodonate.com/Fdcmain/TaxBenefits.aspx

 

[paul7979]

Thanks royster13, I couldn’t find the article in the archives because it was in the current edition. I’m not sure if it’s referencing the same as the link you put up or not, I’ll have to look closer.

http://www.pmq.com/Tax-law-changes-could-help-pizzerias/

 

[bodegahwy]

Hmmm… I do not even track it. The food used is in my food cost. Same for the labor in labor cost. I always understood that was the limit of what you could write off anyway. i.e. you can’t expense those costs and then ALSO deduct the donation. No time to read the article right now but is it saying something different?

 

[brad_randall]

…is it saying something different?

Restaurants can take a “double deduction” on the value of certain food donations. Read about it starting on page 13: http://www.irs.gov/pub/irs-pdf/p526.pdf

There are a few hoops regarding record keeping to jump through in order to do this.

 

[bodegahwy]

Description actually starts on page 12. I can’t see doing this hoop-jumping for typical donations. I went through the math two different ways: assuming just COGS and assuming labor cost to produce ready to eat pizza. The first way does give me roughly double the food cost but the amount is about equal to food cost plus labor looking at my overall percentages. Using a cost assuming labor in the value of the donation the deduction is even bigger but I could not find any place that says this is allowed and it would be pretty hard to document in an audit. Another possible headache is determining fair market value: Is that your menu price or is it the true typical selling price including discounts? hmmm

I think I will stick with simply not claiming a charitable in kind deductions since the COGS and labor are deductible anyway. This is what my CPA recommended to me years ago and it is certainly simpler!