A5598

An Act allowing tax deductions under the corporation business tax and gross income tax for certain charitable contributions of food made from business inventory, supplementing P.L.1945, c.162 (C.54:10A-1 et seq.) and chapter 3 of Title 54A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. a. A taxpayer shall be allowed as a deduction for computing entire net income an amount equal to the full value of the deduction that the taxpayer was allowed for federal income tax purposes and for which the taxpayer had taken for federal income tax purposes pursuant to section 170 of the federal Internal Revenue Code (26 U.S.C. s.170); provided, however, such deduction shall only be allowable in computing entire net income pursuant to section 4 of P.L.1945, c.162 (C.54:10A-4) to the extent the corresponding amounts of income, that the deduction was attributable to and taken against for federal income tax purposes, have not been excluded or exempted pursuant to any provision of the “Corporation Business Tax Act (1945),” P.L.1945, c.162 (C.54:10A-1 et seq.).

b. The deduction allowed pursuant to this section shall only apply to charitable contributions of apparently wholesome food made by the taxpayer to a food bank during a taxpayer’s privilege period.

c. As used in this section:

“Apparently wholesome food” means the same as that term is defined in subsection (b) of section 22 of the federal “Bill Emerson Good Samaritan Food Donation Act” (42 U.S.C. s.1791).

“Charitable contribution” means the same as that term is defined in subsection (c) of section 170 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.170).

“Food bank” means the same as that term is defined in section 2 of P.L.1982, c.178 (C.24:4A-2).

2. a. A taxpayer shall be allowed to deduct from gross income an amount equal to the full value of the deduction that the taxpayer was allowed for federal income tax purposes and for which the taxpayer had taken for federal income tax purposes pursuant to section 170 of the federal Internal Revenue Code (26 U.S.C. s.170); of charitable contributions of apparently wholesome food made to and accepted by a qualified food bank in the taxable year for the federal taxable year under the provisions of paragraph (3) of subsection (e) of section 170 of the federal Internal Revenue Code (26 U.S.C. s.170).

b. The deduction allowed pursuant to this section shall only apply to charitable contributions of apparently wholesome food made by the taxpayer to a food bank during the taxable year.

c. (1) A business entity that is classified as a partnership shall not be allowed a deduction pursuant to this section directly, but the amount of deduction of a taxpayer in respect of a distributive share of partnership income shall be determined by allocating to the taxpayer that proportion of the deduction acquired by the partnership that is equal to the taxpayer’s share, whether or not distributed, of the total distributive income or gain of the partnership for its taxable year ending within or with the taxpayer’s taxable year.

(2) The deduction for a taxpayer that is a corporation that may be treated as a New Jersey S corporation pursuant to section 3 of P.L.1993, c.173 (C.54:10A-5.22) may be applied by the shareholders of the S corporation against the tax liability otherwise due pursuant to the “New Jersey Gross Income Tax Act,” N.J.S.54A:1-1 et seq., provided that the amount of deduction that may be used by a shareholder of the S corporation shall be determined by allocating to each shareholder of the S corporation that proportion of the tax deduction of the S corporation that is equal to the shareholder’s proportionate share of the S corporation, whether or not distributed, of the total distributive income or gain of the S corporation for its privilege period ending with or within the shareholder's taxable year, and the deduction may be applied by the shareholders against the tax liability otherwise due pursuant to the "New Jersey Gross Income Tax Act," N.J.S.54A:1-1 et seq.

d. As used in this section:

“Apparently wholesome food” means the same as that term is defined in subsection (b) of section 22 of the federal “Bill Emerson Good Samaritan Food Donation Act” (42 U.S.C. s.1791).

“Charitable contribution” means the same as that term is defined in subsection (c) of section 170 of the federal Internal Revenue Code of 1986 (26 U.S.C. s.170).

“Food bank” means the same as that term is defined in section 2 of P.L.1982, c.178 (C.24:4A-2).

3. This act shall take effect immediately and apply to privilege periods and taxable years beginning on or after January 1 next following enactment.

STATEMENT

This bill allows corporation business tax and gross income tax deductions for charitable contributions of apparently wholesome food made from business inventory in a taxpayer’s privilege period or a taxable year, as allowed under subsection (e) of section 170 of the federal Internal Revenue Code of 1986. These deductions mirror the federal income tax deductions allowed for charitable contributions of food made from business inventory. These deductions will apply to privilege periods and taxable years beginning on or after January 1 next following enactment.

The deductions allowed by this bill are permitted for certain charitable contributions of apparently wholesome food. The bill defines “apparently wholesome food” to mean any food that meets all quality and labeling standards imposed by federal, State, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. The bill defines “charitable contribution” to mean the same as that term is defined in subsection (c) of section 170 of the federal Internal Revenue Code.

If a taxpayer is classified as a partnership for State tax purposes or is a New Jersey S corporation, then the amount of the deduction may be claimed by each taxpayer on a pro rata basis according to the taxpayer’s distributive share of income from the partnership or New Jersey S corporation.