Donating food inventory.

The seven conditions

The special rules apply only if all of the following are met: you made a contribution of apparently wholesome food from your trade or business; the food is to be used only for the care of the ill, the needy or infants; the use is related to the organization’s exempt purpose or function; the organization doesn’t transfer the food for money, other property or services; you receive a written statement from the organization that it will comply with those three conditions; the organization isn’t a private nonoperating foundation; and the food satisfies the Federal Food, Drug, and Cosmetic Act requirements on the date of transfer and for the previous 180 days.

Apparently wholesome food is food intended for human consumption that meets all quality and labeling standards imposed by federal, state and local laws, even though it may not be readily marketable because of appearance, age, freshness, grade, size, surplus or other conditions.

Worksheet 1, line by line

1. FMV of the donated food.
2. Basis of the donated food.
3. Line 1 minus line 2. If it is zero or less, stop; your deduction is line 1.
4. One-half of line 3.
5. Line 1 minus line 4.
6. Line 2 times 2.0.
7. Line 5 minus line 6 (not less than zero).
8. Line 4 plus line 7.
9. The smaller of line 3 or line 8.
10. Line 1 minus line 9.
11. 15% of total net income from all trades or businesses from which food inventory was donated.
12. The smaller of line 10 or line 11: your deduction.

What it does in plain terms

The result is basis plus half of the gain, but never more than twice basis, and never more than 15% of net income. It improves on the ordinary income property rule, which generally limits the deduction to basis.

FMV and basis details

For line 1, use the price at which you sold the same or substantially the same food at the time of the gift. Don’t reduce it because the food wasn’t or couldn’t be sold because of internal standards, lack of market or similar circumstances, and don’t reduce it even if you produced the food only to donate it. If you don’t account for inventories under section 471 and aren’t required to capitalize indirect costs under section 263A, you may elect to treat basis as 25% of FMV for line 2.

The 15% cap and carryover

Line 11 is 15% of your net income for the year from all sole proprietorships, S corporations, partnerships or other non-C-corporation entities from which food inventory was donated, figured before any deduction for food inventory gifts. With several gifts, complete a separate worksheet for each, but fill in lines 11 and 12 on only one: compare line 11 with the total of the line 10 amounts. If line 11 is smaller than line 10, the excess carries over, and you may include it in the food deduction in each of the next 5 years in order, until used up.

Worked example

Hypothetical. A grocer donates produce with FMV of $1,000 and basis of $400. Net income is $50,000. Line 3 = $600; line 4 = $300; line 5 = $700; line 6 = $800; line 7 = $0 (700 − 800 is negative); line 8 = $300; line 9 = $300; line 10 = $700; line 11 = $7,500; line 12 = $700. The deduction is $700, which is basis plus half the gain. If net income were only $2,000, line 11 would be $300, the deduction $300, and $400 would carry over.

Where donors go wrong

• Skipping the written statement from the organization that it will meet the use and no-transfer conditions.
• Giving to a private nonoperating foundation, which is disqualified for these rules.
• Lowering FMV because the food could not be sold; the instructions say not to.
• Forgetting that food must have met the Federal Food, Drug, and Cosmetic Act requirements for the 180 days before the transfer.
• Applying the 15% cap per gift rather than across all the businesses that donated; complete lines 11 and 12 on only one worksheet.

Related

For vehicles and other special property see donating a car, and for the limits that apply to other gifts see the AGI limits and carryover pages.

Sources

• IRS Publication 526 (2025), Charitable Contributions: the sections cited on this page. Read November 2, 2026.
• IRS Tax Exempt Organization Search: the tool Pub 526 names (IRS.gov/TEOS) for checking whether an organization can receive deductible gifts. Pointed to, not queried.

Edition read: Publication 526 (2025), for use in preparing 2025 returns. Its “How To Get Tax Help” section notes that P.L. 119-21 (July 4, 2025) enacted tax reform, with updates at IRS.gov/OBBB; this page states no 2026 changes that the publication text does not spell out, so check the 2026 edition when it is released. Where the publication refers to Pub 544, Pub 561 or the Instructions for Form 8283 for more detail, this page does not restate those documents. This page summarizes the publication and does not replace it.