IRS Publication 561: Determining The Value Of Donated Property

AAA

DEFINITION of 'IRS Publication 561: Determining The Value Of Donated Property'

A document published by the Internal Revenue Service (IRS) that provides taxpayers with information on how to determine the fair market value (FMV) or appraisal value for property donated to a qualified organization. Taxpayers can donate a wide variety of property, including used clothing, art, real estate, securities, patents and business inventory.


Certain donated items, such as pieces of art, may be valued higher than others and allow the taxpayer to claim a much higher deduction than usual. These items may carry extra reporting requirements, such as photographs and a qualified appraisal letter.

INVESTOPEDIA EXPLAINS 'IRS Publication 561: Determining The Value Of Donated Property'

Determining the fair market value of an item or piece of property can be difficult because there is no single (or simple) way in which it is set. A good indicator of the fair market value is the price the item or property fetches when sold by the organization the donor gave it to. Another method is to compare the price of the item to the sales price of a similar item.


IRS Publication 561 does not provide donors with information on how to determine the amount of a donation that can be deducted, what records the donor should keep or how to substantiate the appraisal claim. More information on those matters are available in IRS Publication 526, Charitable Contributions.

RELATED TERMS
  1. Qualified Appraisal

    An appraisal document that is created, signed and dated by a ...
  2. Qualified Appraiser

    An individual who has earned an appraisal designation from a ...
  3. IRS Publication 559: Survivors, ...

    A document published by the Internal Revenue Service (IRS) that ...
  4. Gemology

    The combined art and science of studying, cutting, valuing, buying ...
  5. Fair Market Value

    The price that a given property or asset would fetch in the marketplace, ...
  6. Charitable Donation

    A gift made by an individual or an organization to a nonprofit ...
Related Articles
  1. Deducting Your Donations
    Taxes

    Deducting Your Donations

  2. An Overview Of Itemized Deductions
    Taxes

    An Overview Of Itemized Deductions

  3. 10 Money-Saving Year-End Tax Tips
    Taxes

    10 Money-Saving Year-End Tax Tips

  4. 10 Most Overlooked Tax Deductions
    Taxes

    10 Most Overlooked Tax Deductions

comments powered by Disqus
Hot Definitions
  1. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold ...
  2. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  3. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  4. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  5. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  6. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
Trading Center