Charity gift?

[ripvanwinkle]

Do I have to buy an item in order to give it to charity? Do I need a cost basis? If I'm given a room of very good furniture only 3 years old because my cousin's wife (who is high maintenance by the way) is getting all new stuff and I don't need it, can I get a deduction for it when I donate it since I didn't pay for it?

Is there a dollar limit at which the IRS will then take a second look at it?

[mwcpa]

a donation is limited to the fair value (fire sale) of an item in good or better condition, it is not the retail price....there is no special amount that the IRS won't look at.... anyone who suggests otherwise is violating the law as written...

in order to claim a deduction you need to be able to detail the item(s) which mist be in good or better condition (your 1972 POS that has 4 bald tires is not worth the mint condition retail sale amount in a Kelley blue book), the receipt from the charity must show the item (or a list must be attached).... you need to maintain this data for a period on not less than 3 years after you file the tax return.

If the value of the item is 499.99 or less no special disclosure is needed other than to show it is a non cash gift.
If the value of the item is 500.00 or more but than 5,000.00 you need to complete a form 8283.
If the value is 5,000.00 or more you need a qualified appraisal which is attached to the tax filings.

here are the rules.
www.irs.gov/publications/p526/ar02.html
www.irs.gov/charities/charitable/article/0,,id=123202,00.html

[ripvanwinkle]

Also, I forgot to ask, what if I donated a few times items throught the year and it totals more than $500? Will I be in trouble.

[mwcpa]

"Also, I forgot to ask, what if I donated a few times items throught the year and it totals more than $500? Will I be in trouble."

Absolutely not, if you follow the rules (including any substantiation requirements, proper presentation of fair value and if all items are in good or better condition) and make all of the proper disclosures... please read the rules that I provided links for.... nothing say you can make only one non cash gift per year, you can make 100s if you like....

please do not think that non cash gifts are limited to some magically number.... there is no magic "gimmie" or magic maximum....

[ripvanwinkle]

I read the form 8282 and it's a little confusing. By this form 8282, I need an Officer of the company to sign this form. I just got a blank receipt from the guy at the drive through donation center with a date on it like I have for the last 20 yrs. Here is a quote from the 1st paragraph of the form:

"Purpose of Form - Donee organizations use Form 8282 to report information to the IRS and donors about dispositions of certain charitable deduction property made within 3 years after the donor contributed the property".

Form 8283 is for contributions of $5,000 or Less and Certain Publicly Traded Securities. I guess I'll have to call H& R Block. I'm doing my own taxes with their software.

[mwcpa]

I highly doubt that a "blank" receipt from XYZ thrift shop will allow you to obtain a 5,000 (or more) charitable contribution for some used furniture.....

And, if the gift is under 5,000 but over 500 you need to detail a lot of information on section A part 1.

You note
The name and address of the Charitable Organization... like Salvation Army, Goodwill Industries, etc
You note the item(s)... 6 bags of clothes is not good enough... so, merely an example of what was in my bags ... 3 men's shirts, 4 slacks, 4 pairs of shoes
You note the date of the gift (this must be noted, various won't work)
The next three are needed if the gift is 500.00 of more...
You note the date you acquired the property (this may be various)
You note how you got the gift
You note the cost basis in the gift
You then note the fair value
The you note where did that value come from

Form 8283 is a pretty simple form for gifts under 5,000 that do not require an appraisal...

and, yes, often time a donee organization must report the price of items sold.... this started with cars, as I alluded to above, the 1972 POS is not worth mint condition full retail value.... Congress realized that people cheat... and changed the law.... no a charity MUST tell you what they price they got when they auctioned the car, that's the value of your gift... and often cases people are looking at scrap value, not the 6,000 (example) that Kelley said (for the mint condition full retail value)....

[ripvanwinkle]

Well, isn't this a fine how do you do! They don't give this form at the drive thru donation, never offered it, and I don't think there is an "Officer" of Goodwill accepting my stuff there to sign!! I'm sure the manager is not a Officer of the Corporation.

In the future I guess I'll have to go to the Corporate Goodwill office (they don't take donations there though) and the stuff at their lobby to get this form.

Thanks for your help.

[ripvanwinkle]

Message deleted by ripvanwinkle.

[ripvanwinkle]

Here is just what they give you at the drive up. It says here is your tax receipt. Totally useless if I get audited I guess.

See attached.

Attachments:

scan0001.pdf.jpg (642.55 KB)

[Deleted]

I take pictures of the goods I am donating and attach that to the 'drive through receipt' so I have proof to show reasonable valuation. Particularly with furniture or goods that I would value over $5 thrift sale value I make sure there is a picture of each item.

[TheOtherMe]

Mar 11, 2012 15:43:20 GMT -5 @rockit said:

I take pictures of the goods I am donating and attach that to the 'drive through receipt' so I have proof to show reasonable valuation. Particularly with furniture or goods that I would value over $5 thrift sale value I make sure there is a picture of each item.

That was the advice we gave clients who were donating goods of any value. You can't prove the condition of items unless you take the pictures.

If you are donating a bag of toys and giving it a value of something like $10 for the bag, you probably don't have anything to be concerned about.

[TheOtherMe]

Mar 11, 2012 15:37:08 GMT -5 ripvanwinkle said:

Here is just what they give you at the drive up. It says here is your tax receipt. Totally useless if I get audited I guess.

See attached.

That is very similar to what any charity I have ever donated goods to hands out. It isn't up to the charity to provide valuation. It's up to you.

Place like Goodwill receive so much junk every year as donations. I have seen them taking complete boxes straight to the dumpster. That type of stuff has no value when it comes to a tax write-off.

If you can remember what you donated, write it all down and look things up on a place like the website for Salvation Army or Goodwill to see what they sell for. You will be surprised at the values and probably not happy at how low they are.

[mwcpa]

Rockit gives good advice.... take pictures... and make a list of the items....

remember the responsibility is on you, not the charity, you want the tax break, they want to help the needy.....

a few years ago, my wife donated 1/2 of her closest (so she could re-fill it) to a charity.... I made her make a list of all of the items... gave her the Salvation Army "value list".... there we go, I have no fear of audit.... the charity accepted the clothing and gave her a receipt to that effect... (we also put some stuff in the trash and made "rags" of some too as they were not in good or better condition.... we did not want to give the charity our trash)