Financial Tax Free Inventory clothing industry

Tax Free Inventory - Financial Guide for the Fashion Industry

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This information has been updated 4/8/07. The regulations are subject to change. Please contact the Internal Revenue Service for clarification regarding their policies etc. If you find that this information becomes out dated, please Contact Us.

Inventory of apparel and accessories can be turned into a federal tax deduction if a business donates it to charity, according to the National Association for the Exchange of Industrial Resources (NAEIR). This deduction is claimed under the section 170 (e) (3) of the U.S. Internal Revenue Code, can be as much as twice the original cost. A free guide that details the donation process as well as a formula for calculating your company’s potential tax savings is available by contacting NAEIR by phone at 800 562-0955 or their web site. www.naeir.org

NAEIR was founded in January, 1977 by Norbert C. Smith, a former aircraft parts manufacturing executive. While working as a charitable gifts consultant to major corporations, he discovered that many companies have millions of dollars worth of new, excess inventory in their warehouses. A new tax regulation, adopted a year earlier, would provide corporations with a federal income tax deduction for donating those goods to qualified schools and nonprofit organizations. Mr. Smith founded NAEIR to secure those products and channel them to organizations that need them. Since NAEIR's founding, it has collected and redistributed over $2 billion worth of new, donated supplies and equipment. Under Internal Revenue Code Section 170(e)(3), materials received through NAEIR are to be used for the care of the ill, needy or minors, and may not be bartered, traded or sold. The products may be used to further the recipient organization's mission, and in its everyday operations. Donor companies have included such well-known firms as 3M, Snap-On, Avery Dennison, E.K. Success, Black & Decker, Russ Berrie, The Stanley Works, Delta Faucet, Department 56 and many of other manufacturers, wholesalers and distributors.