Tax write off for excess inventory donation?

2012-10-20 11:39 pm

I have some excess inventory, and want to donate to a charity. However, I am confused what kind of tax deduction I could make. Let's say if the cost of the inventory is $100, however, I could sell it for $500 (Fair Market Value). What is the tax write off for this inventory? Also, is there a time limit on how long the inventory sits in the shelf to quality? I see some articles mentioned "straight cost deduction", what is it? I am a sole proprietary and this is a very small ebay type of business I am running. Thank you very much!

更新1:

Thank you for your quick response. I have read articles describing Fair Market Value. Some suggested that if it can not be written off as business excess inventory, then, convert it as personal usage (pay tax on it), then donate, which is calculated as Fair Market Value. Researching on the web leaves me very confused...

更新2:

Thank you for your response!

回答 (3)

[匿名]

2012-10-20 11:41 pm

✔ 最佳答案

What you can sell it for is meaningless. You didn't spend that to buy it. If it's gone down in value, be prepared to claim even less. If the makeup has expired, trash it.

See IRS publication 334. It's spelled out there.

By the way, if you donate it, you still claim the donation on your personal taxes.

Edit, it's FMV if FMV is LESS than what you paid for it. You are not going to get a $500 deduction out of this.

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Judy

2012-10-21 12:06 pm

Your deduction is the lower of FMV or your basis, so in this case is $100.

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tro

2012-10-21 8:40 am

you can only claim what you paid for it if that is how you kept your inventory
and actually if you get rid of it which means your inventory is less when you calculate your gross profit, you have already claimed less profit on your Sch C

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