In an internal legal memorandum (ILM 20144014), the IRS concluded that a taxpayer's contributions of wrinkle creams, hair gels, perfumes, hair sprays, hair texturizers, curling irons, hair dyes, nail polishes, epilators and hair restoration treatments are not qualified contributions eligible for the enhanced charitable contribution deduction under Section 170(e)(3), because they are not needed for the care of the ill, the needy or infants.
In general, the amount of the deduction for a charitable contribution of inventory is limited to the lesser of the fair market value or the basis of the inventory. Section 170(e)(3) provides a special rule allowing an enhanced deduction in the case of qualified contributions of inventory. The enhanced deduction applies only to donations of property used by the donee solely for the care of the ill, the needy or infants.
The IRS concluded that the donated products do not serve a medical purpose, have no relation to alleviating or satisfying the necessity of life and do not serve the bona fide need of infants. Additionally, the products are luxury items rather than necessities of life, the IRS said. Accordingly, those products did not qualify for the enhanced deduction under Section 170(e)(3).
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