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. Comparables

    A valuation technique in which a recently sold asset is used ...
  5. Gemology

    The combined art and science of studying, cutting, valuing, buying ...
  6. Appraisal

    A valuation of property (ie. real estate, a business, an antique) ...
Related Articles
  1. Taxes

    Deducting Your Donations

    Generosity may be its own reward, but some charitable giving also provides personal tax benefits.
  2. Taxes

    An Overview Of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  3. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  4. Taxes

    10 Most Overlooked Tax Deductions

    The receipts you cram into your wallet could be replaced with cash come tax season.
  5. Budgeting

    It Is Better To Give AND Receive

    You give to benefit others, but there can be perks for you too.
  6. Retirement

    Non-Cash Contribution Rules Could Cut Returns

    Higher standards for certain contributions could mean smaller deductions for you.
  7. Retirement

    Cut Your Tax Bill

    Paying your bills early or giving an extra donation now can help you come tax time.
  8. Savings

    How Microeconomics Affects Everyday Life

    Microeconomics is the study of how individuals and businesses make decisions to maximize satisfaction. Microeconomic principles can describe many everyday experiences. We use renting a New York ...
  9. Taxes

    How Does An IRS Audit Work?

    It doesn't automatically mean an IRS agent will be ringing your doorbell. Here are the different types of IRS audits and how to handle them.
  10. Taxes

    Switzerland's Declining Tax Haven Appeal

    Switzerland's tax haven allure is being threatened by efforts by the US and other governments to make Swiss banks give up their much-vaunted secrecy.

You May Also Like

Hot Definitions
  1. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  2. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  3. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  4. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  5. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
  6. Currency Carry Trade

    A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase ...
Trading Center