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1 1 (February 5, 2021)

handle is hein.crs/goveccy0001 and id is 1 raw text is: Congressional Research Service ~ ~~ ~informing the legis ative debate since 1914____________________ Temporary Enhancements to Charitable Contributions Deductions in the CARES Act Updated February 5, 2021 Individuals and corporations are allowed a deduction for charitable contributions on their tax returns. The Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) provided temporary increased benefits for 2020 for some of these deductions. These provisions were extended through 2021 by Division EE of the Consolidated Appropriations Act, 2021 (P.L. 116-260). Law Before the CARES Act The deduction for charitable contributions is one of several tax benefits for charitable giving and tax exempt organizations. Individuals may take a charitable deduction if they itemize deductions. Prior to the 2017 tax revision, popularly known as the Tax Cuts and Jobs Act (TCJA; P.L. 115-97), the limit for individuals was 50% of adjusted gross income for gifts (other than gifts of appreciated property) to public charities. (The limit was 30% for gifts of appreciated property, 30% for ordinary gifts to private foundations, and 20% for gifts of appreciated property to private foundations.) The TCJA increased the 50% limit to 60% through 2025 for cash contributions. The TCJA also increased the standard deduction and limited other itemized deductions, reducing the share of taxpayers with a charitable contributions deduction from an estimated 21% to 9%. The corporate charitable deduction is limited to 10% of taxable income. Corporations (and individuals, in some instances) are allowed special deductions for contributions of inventory. Normally, inventory contributions are limited to the lesser of basis (cost) or fair market value, with inventory reduced by the contributions (so that any inventory cost that is in excess of fair market value can still be deducted in calculating taxable income as the cost of goods sold). For C corporations contributing inventory to 501(c)(3) organizations for the care of the ill, the needy, or infants, the deduction is the basis plus half the difference between the fair market value and basis, up to twice the basis. A similar enhanced deduction exists for businesses (both corporate and noncorporate) for food inventory contributions for the care of the ill, needy, and infants. Cash basis taxpayers who do not keep inventories (including many farmers and some other small businesses) are allowed to deduct half the fair market value under the enhanced food inventory deduction, plus deducting the cost as a business expense. This enhanced deduction for food inventory is limited to 15% of taxable income from the business for both individuals and corporations. Congressional Research Service https://crsreports.congress.gov IN11420 CRS INSIGHT Prepared for Members and Committees of Congress

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