I 111th CONGRESS 1st Session H. R. 3227 IN THE HOUSE OF REPRESENTATIVES July 15, 2009 Mr. Levin (for himself and Mr. Davis of Kentucky) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to permanently extend and expand the charitable deduction for contributions of food inventory.

1.

Extension and expansion of charitable deduction for contributions of food inventory

(a)

Permanent extension

Subparagraph (C) of section 170(e)(3) of the Internal Revenue Code of 1986 is amended by striking clause (iv). (b)

Determination of basis for taxpayers other than C corporations

Subparagraph (C) of section 170(e)(3) of such Code, as amended by subsection (a), is amended by adding at the end the following new clause: (iv)

Determination of basis for taxpayers other than C corporations

If a taxpayer— (I)does not account for inventories under section 471, and (II)is not required to capitalize indirect costs under section 263A,the taxpayer may elect, solely for purposes of subparagraph (B), to treat the basis of any apparently wholesome food as being equal to 25 percent of the fair market value of such food.. (c)

Determination of fair market value

Subparagraph (C) of section 170(e)(3) of such Code, as amended by subsections (a) and (b), is amended by adding at the end the following new clause: (v)

Determination of fair market value

In the case of any such contribution of apparently wholesome food which, solely by reason of internal standards of the taxpayer, lack of market, or similar circumstances, or which is produced by the taxpayer exclusively for the purposes of transferring the food to an organization described in subparagraph (A), cannot or will not be sold, the fair market value of such contribution shall be determined— (I)without regard to such internal standards, such lack of market, such circumstances, or such exclusive purpose, and (II)by taking into account the price at which the same or substantially the same food items (as to both type and quality) are sold by the taxpayer at the time of the contribution (or, if not so sold at such time, in the recent past).. (d)

Special rule for contributions in 2009 and 2010

Subparagraph (C) of section 170(e)(3) of such Code, as amended by subsections (a), (b), and (c), is amended by adding at the end the following: (vi)

Special rule for 2009 and 2010

In the case of any such contribution during any taxable year beginning in 2009 or 2010, notwithstanding subparagraph (B), the amount of the reduction determined under paragraph (1)(A) shall not exceed the amount by which the fair market value of the apparently wholesome food exceeds twice the basis of such food. . (e)

Effective Dates

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to contributions made after the date of the enactment of this Act, in taxable years ending after such date. (2)

Special rule for 2009 and 2010

The amendment made by subsection (d) shall apply to contributions made in taxable years beginning after December 31, 2008.