SPECIAL BENEFITS FOR "C" CORPORATE DONORS

1. What are the Special Benefits to Corporations for Donations of Inventory?

Under IRS Section 170(e)(3), corporations which donate inventory (i.e. Property sold in the normal course of business) to certain charitable organizations, such as WHAM, may receive an additional tax benefit.  Section 170(e)(3) provides a deduction for corporate contributions of inventory as much as twice the donor's adjusted basis for the inventory.

For this benefit to apply, inventory must be donated to a public charity (such as WHAM) that will use the property for the benefit of the ill, the needy or minor children.

The charitable deduction for contributions of inventory (from a C corporation) will be the total of the donor's tax basis and its fair market value. This is limited to 200% of the inventory tax basis plus any incidental costs (i.e., shipping, warehousing) associated with donating the inventory.  If the fair market value of the inventory is less than the donor's tax basis in the donated inventory then the charitable deduction should be equal to the fair market value.

Consult your tax advisor for consideration of this option.

2. What is an example of a tax benefit from inventory Contributed toWHAM.

Assume the following facts:	Example 1	Example 2
Inventory cost (basis):	$1,000	$1,000
Inventory fair market value:	$2,100	$3,200
Inventory appreciation:	$1,100	$2,200
Tax deductible contribution:
Cost	$1,000	$1,000
50% of appreciation limited tp 200% of cost	$ 500	$1,000
Total tax deduction contribution	$1,500	$2,000

3. What can I donate.

Food	Electronics	Baby Items
Bedding Items	Bathroom Items	School Supplies
Clothing	Hardware	Health & Beauty Items
Home furnishings	Small Appliances	Pet Supplies
Kitchen accessories	Gift Items	Housewares