Charitable Contributions And Deductions - Appraisals and Substantiation Requirements

Appraisals
Taxpayers need to be prepared to support all high valued property deductions with a detailed proof of cost, the date of acquisition and how the value was appraised. If you are claiming a deduction exceeding $5,000 for an item, or for a similar group of items (baseball card collection, art pieces, coins, etc…), you generally need a written appraisal from a qualified appraiser. The appraiser must be unrelated to the party claiming the deduction, and sign a declaration on Form 8283 that they meet the requirements of a qualified appraiser. The appraisal must also be within 60 days of the date of your donation.

If donating the gross proceeds from a sale of publicly traded securities, non-publicly traded securities of $10,000 or less, intellectual property, business inventory or vehicles, an appraisal would not be required per an exception to the appraisal rule. All deductions exceeding $500,000 require an appraisal under all circumstances.

Substantiation Requirements

  1. Cash Contributions - The IRS has tightened their standards when it comes to cash contributions, checks, credit cards and exchange-traded fund (ETF) transfers. Regardless of the amount, they must be substantiated by a canceled check or a bank or credit card statement. A receipt from the charity showing the name of the charity, date and amount of the contribution is highly recommended.
  2. Non-cash contributions under $250 - A dated receipt from the charity containing a detailed description of the property is preferred. If depositing an item such as clothes at an organization's drop site and no receipt is available, proper documentation will be acceptable.
  3. Contributions of $250 or more - Requires a written receipt or acknowledgement from the charity. You may not rely on a bank statement or canceled check to satisfy the records requirement.
  4. Donations exceeding $500 (cars, boats, airplanes, motor vehicles) - Requires a written acknowledgement from the charity on Form 1098-C. Taxpayers will need to attach Form 8283 to their tax return or the IRS may disallow the deduction.
  5. Property deductions exceeding $5,000 - Written appraisal is required from a qualified appraiser.
Charitable Contributions by Business Entities
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