Food isn't "capital property" in general, so it's a different deduction, but in the end it comes out much the same. Which is what I said. The price they paid for it is already a deduction, so there is generally no further deduction from donating it vs. throwing it away and writing it off.
> This is even easier for businesses, since for things like bikes that strictly decrease in value, the donation value is probably just the purchased price - accrued depreciation (which itself was modeled using methods similar to FMV).
But that's the problem. They buy something, use it (or intend to use it but don't), and then throw it away. One way or another that allows them to write off the entire cost.
Which means there isn't any additional deduction available for donating it to a charity instead of wasting it at the end, so there is nothing there to offset their cost/risk of making a donation instead of throwing it in a dumpster, and that causes tons more stuff to end up in the dumpster.
That's because according to the tax code, businesses can claim depreciation of all capital property. They can't claim their cost of the donated property because they are already claiming the depreciation.
> What would fix it is to let them deduct the value of the donated food/whatever instead of its cost
The IRS already bases deductions for donations on Fair-market-value (FMV) of the donation. They have an entire guide for assessing FMV for the purposes of donation:
https://www.irs.gov/publications/p561 [1]
The guide explicitly addresses the question of cost vs value and how time between the initial purchase and sale might affect the value.
This is even easier for businesses, since for things like bikes that strictly decrease in value, the donation value is probably just the purchased price - accrued depreciation (which itself was modeled using methods similar to FMV).