The CARES Act makes four significant liberalizations to the rules governing charitable deductions, 2 of which affect corporations:
- The limitation on charitable deductions for corporations that is generally 10% of (modified) taxable income doesn’t apply to qualifying contributions made in 2020. Instead, a corporation’s qualifying contributions, reduced by other contributions, can be as much as 25% of (modified) taxable income. No connection between the contributions and COVID-19 activities is required.
- For contributions of food inventory made in 2020, the deduction limitation increases from 15% to 25% of taxable income for C corporations and, for other taxpayers from 15% to 25% of the net aggregate income from all businesses from which the contributions were made.