The value of noncash charitable contributions is generally determined by the fair market value (FMV) of the property at the time of the donation. FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell, and both having reasonable knowledge of relevant facts. For property that has increased in value, special rules may apply, such as reducing the deduction by the amount of appreciation if the property is capital gain property. The IRS requires specific substantiation depending on the value of the contribution.
Substantiation Requirements by Deduction Amount
- Deductions under $250: You must obtain a receipt or written acknowledgment from the qualified organization showing the name and address of the organization, date and location of the contribution, description of the property, and for securities, the name of the issuer and whether it is publicly traded. If a receipt is impractical (e.g., unattended drop site), reliable written records must include the same information plus FMV and how it was determined.
- Deductions of $250 to $500: You must obtain a contemporaneous written acknowledgment (CWA) from the qualified organization. The CWA must include a description of the property (not necessarily its value), whether goods or services were received in return, and if so, a description and good faith estimate of their value. If only an intangible religious benefit was received, the acknowledgment must state this.
- Deductions over $500 but not over $5,000: You must complete Form 8283, Section A, and provide a CWA. Section A requires detailed information about the property, including its description, FMV, condition (for tangible property), how you acquired it, date you acquired it, and cost basis (if held less than 12 months). For securities, you must also indicate if they were publicly traded.
- Deductions over $5,000: You must complete Form 8283, Section B, obtain a qualified written appraisal from a qualified appraiser, and provide a CWA. The appraisal must include the appraiser’s declaration, signature, and date. The form must also include the qualified organization’s taxpayer ID number and signature, date received by the organization, and details about the property’s FMV and whether it was a bargain sale.
Special Considerations
- Large quantities: If donating large quantities of similar items (e.g., 500 religious books), your deduction is limited to the FMV at which similar items are currently being sold unless you can prove a higher market price.
- Property with appreciation: If you donate property that has increased in value (e.g., capital gain property), your deduction may be limited to your adjusted basis if you receive consideration in return (bargain sale). See Publication 526 for detailed steps.
- Carryover deductions: If your deduction is limited by AGI and you carry over unused deductions to future years, you must attach a copy of the previous year’s Form 8283 and any required appraisal to your current return.
- Pass-through entities: If you are a member of a pass-through entity (e.g., partner in a partnership) that made a noncash contribution over $500, you must attach multiple Forms 8283: one from the donating entity, one from any intermediate entities, and your own Form 8283 with your share of the contribution.
Source:
Publication 526: Charitable Contributions
Form 8283: Noncash Charitable Contributions
Disclaimer: Always verify details with current Federal or State Department of Revenue Forms and Instructions. This guidance is general and may not apply to all individual circumstances. For complex situations, consult a CPA or tax attorney.