Charitable giving of business inventory

A self employed business owner generally may not deduct more than the cost of the business inventory if he or she makes a charitable contribution of business inventory.

Determining the charitable contribution values of business inventory

If the self employed business owner claims a charitable tax deduction on the charitable giving on business inventory, costs incurred in a year prior to the year of donation must be removed from opening inventory and excluded from the cost of goods sold when figuring out business gross profit for the year of the charitable contribution.

Non deductible charitable contributions

No charitable contribution tax deduction is allowed for a gift of merchandise that was produced or acquired in the year donated. Instead, the cost is added to the cost of goods sold to figure gross profit for the year of the charitable contribution. Business charitable tax deductions are not subject to the percentage limitation applied to charitable contributions.