Determining the Value of Donated Property

General Rules for Determining the Value of Donated Property

According to the IRS (Publication 561; Determining the Value of Donated Property) in order to determine how much you may deduct for property you contribute to a qualified recipient you must first determine the fair market value (FMV) of the item as of its date of contribution. The Fair Market Value is the price the property would sell for on the open market, in an arms-length transaction, between a willing buyer and a willing seller, both having reasonable knowledge of the facts. If you put any restriction on property you donate the Fair Market Value must be adjusted to reflect that restriction. Your deduction of contributions of paintings, sculptures, and other objects of art should be supported by a written appraisal from a qualified and reputable source, unless the deduction is for $5000 or less. Remember, even if the deduction is for $5000 or less, you still need to determine the fair market value of the donated property and you should document the methodology you used to determine that fair market value. If you intend to take a deduction of $20,000 or more you must attach a copy of the appraisal to your return and if you intend to take a deduction of $50,000 or more you may request a statement of valuation from the IRS by following their procedures. This information is provided for your convenience only and is not intended to constitute legal or tax advice. Please consult a qualified tax attorney or CPA for professional advice regarding deductions for charitable donations and how to value the property being donated.

October 25, 2012

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