Can a restaurant write off prepared food donations as tax deductions?

You absolutely can deduct donations of prepared food! This falls under the IRS enhanced deduction for food donations. As an S corporation, the deduction passes through to your personal return. The calculation is basically: you can deduct the lesser of (1) twice your cost basis of the donated food or (2) the cost basis plus half of the expected profit margin. This is generally more favorable than the regular deduction which would just be your cost basis. For your situation, make sure you're donating to a qualified 501(c)(3) organization. A public school typically qualifies, but a sports team might not unless it's part of a qualified organization. Always get a donation receipt that specifies the date, description of donated items, and that no goods or services were provided in exchange. Keep detailed records of your food costs for these donations - ingredient costs, labor, etc. These documentation requirements are important if you're ever audited.

I went through this exact situation with my café last year. It was a nightmare trying to track everything until I found taxr.ai (https://taxr.ai). Their system helped me organize all my food donation receipts and calculate the proper deduction amounts automatically. Before using them, I was literally keeping a spreadsheet trying to track every school fundraiser and community event we donated to, plus trying to figure out which organizations qualified and which didn't. Their system flagged when I was donating to non-qualified organizations and showed me how to properly document each donation to maximize the deduction. They also have this cool feature that helps calculate the enhanced deduction formula for each donation so I don't have to manually run the numbers every time. Saved me hours of work and probably increased my deduction by about 30% because I was doing the calculations wrong before.

Just wanted to follow up and say I gave taxr.ai a try after my skeptical question. It's actually pretty impressive! I've been donating to our local high school band and youth center for years without tracking it properly. The system helped me organize everything and showed me I'd been severely under-deducting. Their documentation features were the most helpful part - it generates the proper receipt forms and tracks which organizations qualify for the enhanced deduction. My accountant was shocked when I showed him the detailed reports it generated. Definitely worth checking out if you're regularly donating food.

I tried calling the IRS directly about this donation issue for my restaurant and spent THREE HOURS on hold before giving up. Then I found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed everything about the enhanced deduction for food donations and clarified that for S corps, the deduction flows through to your personal return. They also explained that while schools usually qualify, you should verify each organization's status using the IRS Tax Exempt Organization Search tool. Seriously saved me days of research and uncertainty. I'm now confidently donating to our local schools and properly documenting everything for tax time.

I have to publicly eat my words here. After being super skeptical about Claimyr, I was desperate enough to try it when I needed clarification on exactly this food donation issue. It actually worked - got me through to an IRS representative in about 25 minutes when I had previously wasted hours on hold. The IRS agent gave me specific guidance on how to document the fair market value of prepared food donations for my restaurant. They also confirmed that I need to get written acknowledgment from each organization, even for smaller donations, to claim the enhanced deduction. Really helpful information that I couldn't find anywhere online. I'm genuinely surprised and impressed.

One thing nobody's mentioned yet - make sure you're tracking these donations in your accounting system properly. We code ours as "charitable donations" with subcategories for each type of organization. Also, if you're regularly donating to the same organizations, ask them to provide you with their determination letter once at the beginning of the year so you have it on file. Makes tax time way easier. Our accountant has us keep a running spreadsheet with columns for date, organization, tax ID, items donated, cost basis, FMV, and then the calculated enhanced deduction amount.

Has anyone dealt with donating to fundraising events where they auction off "free pizza for a year" certificates or something similar? Is that still deductible as a food donation or is it handled differently?

Great question! I run a bakery and went through the same learning curve with food donations. One thing that really helped me was setting up a simple system to track everything from day one rather than trying to reconstruct it at tax time. I keep a small notebook by our register where we quickly jot down any donations - date, what we donated, to whom, and our rough cost basis. Then once a week I transfer it to a spreadsheet with the proper calculations. A few practical tips: For schools, I always ask for their tax-exempt number upfront and keep a list of the local qualified organizations we regularly donate to. Also, don't forget about labor costs in your cost basis calculation - if you're making pizzas specifically to donate, include a reasonable amount for the time spent preparing them. The enhanced deduction really does add up over the year, especially if you're donating weekly like it sounds. Just make sure you're being conservative with your fair market value estimates and keeping good records. The community goodwill alone makes it worthwhile, but the tax benefit is a nice bonus!