Thanks for sharing your educated opinion about this.
Really, the only thing I've ever seen about the IRS and couponing was at some point a long time ago they attempted to tax monies received from mailing in rebates.
At the time I read the news article, it was mentioned that SOME people get some pretty big savings accounts going which are solely "fed" by rebate checks, and that's how the whole issue started. Anyway, it was ruled AT THAT TIME, I have NO idea if it has changed, that Rebate Checks are NOT taxable income.
I've read that if you donate used household goods and old clothes to the Salvation Army, that you cannot deduct what you paid for them, but only the fair market value of what they'd be priced at a Garage Sale AKA Yard Sale.
But all those rules & regs change so frequently.
I got irritated when I learned about the IRS going after "Rebater Mom & Pops" because there obviously are BIG FISH like Bernie Madoff and the Wallstreet Crooks who make off with millions upon millions upon millions......
With donated clothes/ furniture/ etc., you can deduct the fair market value of the item in its current condition (i.e. used), no matter what you paid for it when it was new. Using the same line of thinking, you can probably logically justify a deduction of the fair market value of food items (which are not used, and thus not reduced in value from the retail purchase price), regardless of what you paid for the item.
However, in an audit, the IRS may come to a different conclusion if they can show that you did not pay fair market value for the items — i.e. if you make $60K a year, and are deducting $25K of donated groceries because you got them for free (virtually), the IRS is going to send up red flags and start asking questions that are hard to answer.
I would think that if you are making reasonbly-sized honest charitable deductions, you should be fine ... if you are using this as a tax shelter, the IRS is likely going to smoke you.
SnakeDoc