Dick Adams wrote:
- quote -

attitude.

However, would you really want to tell a charity to go
"dumpster diving"?

C$,
HL

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Moderator: QED
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- quote -

If this is just the "uncooked" food (bags of rice, boxes of
pasta, cans of beans, etc) you could just debit donations
and credit inventory for the cost of the food.

If is cooked food, you could theoretically go through the
trouble of allocating the incremental costs to donations,
and crediting the appropriate expenses (gas, labor,
overhead, etc), but the donations may not be material enough
to waste all the time to do so.

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Harlan Lunsford <hlunsfordns[at]bellsouth.net> writes:
- quote -

Interesting!! So at the end of each day a very large
restaurant has $60 (retail value) of food that they drop off
at a shelter. If they toss it in the dumpster, it'll just
wash out in COGS. But since they donate it to a charity,
they owe the Sales Tax gang 5% of $60 * 365 or $1,095.

Is that what you are saying, Harlan? If it is, then the
optimal tax strategy is to tell the shelter people where
the dumpster is located. <smirk
Dick

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Paul A. Thomas wrote:
- quote -

Okay Paul, I'll go along with you on this, up to a "de
minimus" amount of ... say...... .001% of retails sales?
(1/10 percent, same guidline I favor for cash short/over)

But remember the sales tax boys from Atlanta, Michelle, and
Athens, Paul. (Come to think of it, I only have one Georgia
sales tax client right now. and I just LOVE that sales tax
short form; much better than the old thin line reports.)

Cheer$,
from "way down..... near Columbus.. Geor.....ja!"

Harlan Lunsford, EA in LA, just cross the hootch.

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Dick Adams wrote:
- quote -

I'm shocked! calling those servants of the state such a word.
For shame.
(remember, I deal with them quite often.)

However, speaking of assigning direct labor costs, that may
not be necessary. All she said was donating food, not
necessarily prepared food.

If prepared food, then sales tax implications are that the
state is due their percentage on retail price. But if just
unprepared food, the measure of tax is on the wholesale
cost.

Cheer$,
Harlan Lunsford, EA in LA

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MichelleinAtlanta wrote:

- quote -

Nope. Cost of food should be withdrawn from Cost of goods
sold and "allocated" as charitable contribution consistence
with shareholders' shares. (huh? lol)

Cheer$,
Harlan Lunsford, EA in LA

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"MichelleinAtlanta" <me[at]you.com> wrote

- quote -

Nope. It's probably wrong, but easiest and best to leave it
in COGS instead of moving the 'donated' goods to
Contributions.

--
Paul A. Thomas, CPA
---------------------
Everyday I beat my own previous record for number
of consecutive days I have stayed alive.

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"MichelleinAtlanta" <me[at]you.com> wrote

- quote -

In an ideal world, the food should be transferred from
inventory to charitable donations. And that is the way
grocery stores should do it.

But a restaurant has the problem assigning direct labor
costs for food preparation to the donation. They should
just let it wash out in Cost of Goods Sold with meticulous
documentation for the sales tax auditors (who can be some
of the nastiest, self-rightous bastards on the planet).

Dick

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I have several restaurant clients who donate food to charity
events. They receive a letter from the charity thanking them
and quantifying the amount of the donation. Isn't the
donation deducted in the ordinary course of business as
"food purchases" or when I adjust the "inventory change"
account? As an S Corp, they don't get to write off the
"sales price" of the food, just the cost. Other than
reclassifying food costs and charitable contributions, am I
missing a deduction?

Michelle Botwinick, CPA

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