NAEIR BLOG

How to Deduct Nonmoving Inventory

Companies can earn an up to twice-code federal income tax deduction on their nonmoving, overstock inventory, by donating it to charity.  Excess inventory may also include returns, buy-backs and discontinued products. 

Your accountant or tax adviser can find the details in Section 170(e) (3) of the U.S. Internal Revenue Code. 

Regular ( C ) corporations may deduct the cost of the inventory donated,  plus half the difference between cost and fair market value.  Deductions may be up to twice cost.

S corporations, partnerships, LLCs and sole proprietorships earn a straight cost deduction. 

Manufacturers, wholesalers, distributors and retailers – whether brick and mortar businesses or online concerns, use the free placement service of the nonprofit NAEIR, headquartered in Galesburg, Illinois. 

NAEIR has accepted their donations of a wide variety of products, provided the donor corporations with proper tax documentation immediately after receiving their inventory, then redistributed those goods to 12,000 qualified nonprofits, schools and churches throughout the United States.  

A partial listing of many of the types of products donated include office and computer supplies and accessories, arts and crafts, classroom supplies, children’s books, janitorial supplies, hand and power tools, apparel, personal care products, paper party goods and decorative supplies and sporting goods and toys. 

Companies pay no fee for NAEIR’s service. 

Recipient groups include elementary and high schools, YM/YWCAs, camps, scouting groups, children’s homes, sheltered workshops, churches of all denominations, and a wide spectrum of social service agencies. 

There’s also a newly launched Teacher’s Program.  It’s specifically geared to both public and private budget-strapped K-12 school educators throughout the country, providing them with free products and supplies they can use in their classrooms. 

For free, no obligation information, call NAEIR’s Corporate Relations Department at (800)-562-0955, or you can send an email to donor@naeir.org.  You can also check out NAEIR’s website at www.naeir.org.

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