Even though gifts of inventory do not provide you with the same income tax benefits as do other gifts (such as cash, appreciated securities, and real estate), contributions of inventory can still make wonderful gifts to Campbell.
“Inventory” is property that you offer for sale to customers in the ordinary course of your trade or business.
Features & Benefits of Making Gifts of Business Inventory
Charitable deduction. Generally, your charitable deduction for a gift of inventory is limited to your cost basis in the item.
Deductibility. But, inventory gifts are deductible up to 50% of your federal adjusted gross income for the year – and if your cash gifts exceed that 50%, then you may deduct the excess over the following five years, again up to 50% of your adjusted gross income for each carry-over year.
Special rule for corporations. If a corporation makes a gift of inventory to Campbell and claims a charitable deduction, it cannot also deduct that same inventory as a cost-of-goods-sold. Generally, taking a deduction for cost-of-goods-sold is more advantageous for the corporation because its charitable deduction is limited to 10% of the corporation’s taxable income. In addition, if the inventory was acquired during the year of contribution, the corporation has to take a cost-of-goods-sold deduction. Also, be aware that some states allow an exemption from sales and use taxes for gifts of inventory to a charity…but some states do not.
Contact person. If you would like to make a gift of business inventory, or if you simply have questions about such gifts, please call Jerry Wood, Assistant Vice President for Institutional Advancement and Planned Giving, at 1-800-334-4111, extension 1222, or email him at firstname.lastname@example.org.