The IRS Code says that regular (C) corporations may deduct the cost of the inventory donated, plus half the difference between cost and fair market value. Deductions may be up to twice cost.
Let’s say you’re a paint manufacturer (and a C corporation) who makes latex house paint that costs you $5 a gallon. Your selling price is $10 per gallon. Your deduction is $7.50 per gallon. If the markup is considerably higher, deductions are limited to twice cost.