Report the lost/damaged inventory as "Removed for personal use." This reduces your ending inventory without recording sales. You can then report your donation under Deductions and Credits >> Charitable Donations.
According to the IRS Pub 334 Donation of inventory:
If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. You must remove the amount of your contribution deduction from your opening inventory. It is not part of the cost of goods sold.
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