Target - Summer Clearance

[NIGELTTF]

I'm pretty sure Target "donates" the goods to Goodwill and gets to write of the "retail" value as a donation on their taxes. They may think its worth it to get the deduction rather than sell at 70% off of retail.

If they did that, the IRS would certainly have something to say about it. That is not how tax law works. I should know, I am a tax accountant.

The Deductable value is Fair Market Value, and with the dollar volumes involved they would certainly need to justify it. FMV is certainly not going to be counted as retail if you aren't moving the product at half off. If they want to do FMV of anything other than what they paid, plus a small markup for overhead, isn't going to survive even the most cursorial of audits because of what is specified in Pub 526, under determination of value of large quanities of similar objects.

Corporate income tax rate being 35% plus about 5% local* still wouldn't result in better after tax income by that decicion process.


*On a side note while this is one of the highest in the world, the deductions and credits available in the US make EFFECTIVE corporate tax rates one of the lowest in the world(Swenden and Ireland actually being quite a bit lower).