John R. Bullis: Documenting charitable gifts of property
IRS Code Sec. 170(f)(8)(A) says no charitable contribution deduction for any contribution of $250 or more is allowed unless the taxpayer substantiates the contribution with a contemporaneous written acknowledgment (CWA) of the contribution by the donee organization (the charity).
The CWA is to state: (1) the amount of cash and a description (but not the value) of any property other than cash contributed; (2) whether the donee (the charity) provided any goods or services in consideration for the contribution, and if it did, a description and good-faith estimate of their value; and (3) if the goods or services consist entirely of intangible religious benefits, a statement to that effect.
A written acknowledgment is contemporaneous if it is obtained by the taxpayer on or before the earlier of: (a) the date he files the original return for the year of the contribution; or (b) the due date for filing (including extensions of time to file) for filing the original return for the year of contribution.
It is generally agreed that most of us have a lot of “stuff” we no longer use or want. Taking those items (furniture, sporting equipment, toys, household items, etc.) to a local charity can give a charitable contribution deduction on Schedule A-Itemized Deductions.
Most of our local charities have received so many contributions, they have difficulty in finding space to hold them. By offering those items for sale, they then have some funds to further their mission and work.
Sometimes the local charity asks “do you want a receipt?” and will provide a paper that gives the date of the gift, but not a detailed list or any estimated values.
So it is best to make a list of the items you are going to give to the charity, as you fill up the box or your vehicle. The list would be best if you had two columns for numbers. One column for your estimated original cost (as best you can remember) and the other column for what you think the charity might sell the item for. Then you should save that list with your receipt from the charity. The estimated value is your deduction amount.
Some of us make more than one trip to the charity each year. That is OK, but you need to save the lists and receipts, even if the value of the items is less than $250.
There are other tax rules for gifts of items worth more than $5,000. The second page of from 8283 would need to be part of your return along with signatures by the appraiser and an official of the charity.
If you are going to claim Itemized Deductions (home mortgage interest, property taxes, etc.), keeping track of the items you give to charities will reduce your income tax that year. It is a bit of a bother to do the lists and save the receipts, but the value of the items you give is a good deduction. If the total value of those gifts is $300 and the last bit of your income is taxed at 25 percent, the tax saved is about $75. Every little bit helps!
Did you hear? “I attribute my success in life to this: I never gave or took an excuse,” said Florence Nightingale.
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.