|
 |
This article appeared in the April/May 1999 issue of AntiquePrime
Magazine & Journal.
For What It's Worth ...
Q. I've donated some furniture to a charity. Do I need an appraisal
to be able to take a deduction on my federal income taxes?
A. Maybe. Check with your tax attorney and/or CPA. Here are some
things to keep in mind:
• The organization receiving your gift must be a qualifying charitable
organization.
• This qualifying charitable organization must have a mission which
is related to the property being donated. You can't take a tax deduction
for donating a sewing machine to a hospital.
• If you place restrictions on what the qualifying charitable organization
can do with the property (i.e., if you tell them they can't sell
it), the Fair Market Value (FMV) must reflect that restriction.
To determine how much a taxpayer may deduct, this FMV determination
must first be made.
What is FMV? Internal Revenue Regulation Section 1.170A-1(c)(2)
defines FMV for donation purposes as "The price at which property
would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or to sell and both having
reasonable knowledge of relevant facts." Let's look at two
examples. If you donate used clothing or household goods to the
Salvation Army, FMV would be the price that typical buyers actually
pay for items of this age, condition, and style. Usually, such items
are worth far less than what was originally paid for them. On the
other hand, for donation of antiques or works of art, the taxpayer
may be giving property that has increased in value. Different rules
apply depending on if that property is ordinary income property
or capital gain property.
IRS Form 8283 is required if your non-cash charitable contributions
are more than $500.00 for the year. For donations between $500.00
and $5,000.00, no appraisal is required, but the taxpayer must complete
Section A on the 8283 Form. Section B is for items (or groups of
similar items) with a FMV of more than $5,000.00 and an appraisal
by a qualified appraiser is required. However, the appraisal does
not need to be attached to the tax return unless the total deduction
(usually for art) is $20,000.00 or more. The appraiser's signature,
as well as your own and one from the qualifying charitable organization,
is required on Form 8283 for donations exceeding $5,000.00.
This is a complex subject for a limited space. I encourage you to
seek the advice of your tax professional.
Back |
