Corps Can Give 25% of Taxable Income

Corporations can give cash gifts to charitable organizations of up to 25% of taxable income in 2020, subject to provisions of the new CARES Act (Coronavirus Aid, Relief and Economic Security Act.) The cash gifts must be made in calendar year 2020, even for fiscal year filers, and are subject to restrictions. An election is required by the act but not outlined so we’ll have to anticipate guidance on the mechanics of the election will come from the IRS. Excess contributions above the limit can be carried forward for 5 years. The new 25% limit is a big boost from the former 10% limit.

Limits are also increased for donations of food inventory to charities who will use the food to care for the ill, needy or infants. Qualifying food inventory donations made in 2020 are generally deductible in amounts up to basis plus one half the gain on the sale of the food, not to exceed 2 times basis. Previously the limit on food donations was 15% of income. For 2020 the limit is increased to 25% of a corporation’s income.