Charitable Contributions In-Kind

[Burke]

I have a client who has given me a large number of Goodwill, etc donations. They total over $5,000. Since they are of the same kind (clothes, HH goods) does this necessitate the completion of Part B of 8283? Instructions tend to indicate yes. Appraisal?? I am suspect of the FMV estimate and have already notified him of several which he cannot take. When I told him he was short of enough to itemize, he came up with some more.

[Burke]

How many separate trips (dates) were involved with the largesse?
You might escape the "per item" limit by listing separately, and charging accordingly.
Of course, I'm **SURE** your client has a very detailed inventory for the Goodwill bags and some cost basis issues, **AND** valued everything at Thrift Shop values? Yup. No doubt!

There were a lot, 17 trips as a matter of fact. One was dated 2018 so I threw it out. I make clients send me all the receipts for these donations. It strains credulity, however, that a single person could possibly donate 123 pairs of jeans, 40 coats, 78 shirts, & 180 items of underwear (I disallowed those as the website of the charitable organization says they don't accept), etc. This is not unusual for this client, whose income is moderate. Only one of the receipts is over $500 and just barely. And it had items other than clothing on it. So all meet the "under $500" rule to list in Part A as I understand it. All receipts are legitimately signed and dated by the individual organizations, but obviously were given to the TP blank and were filled in by the client, which is how these organizations always do it.

[TAXNJ]

I have a client who has given me a large number of Goodwill, etc donations. They total over $5,000. Since they are of the same kind (clothes, HH goods) does this necessitate the completion of Part B of 8283? Instructions tend to indicate yes. Appraisal?? I am suspect of the FMV estimate and have already notified him of several which he cannot take. When I told him he was short of enough to itemize, he came up with some more.

From the Goodwill website:

“HOW TO GET TAX DEDUCTIONS

When you drop off your donations at your local Goodwill, you’ll receive a receipt. Hang on to it! You can claim a tax deduction for donations that are in good condition.

The U.S. Internal Revenue Service requires you to state the value of your donation in order to claim a deduction.”

https://www.goodwill.org/donate/

[Burke]

Most people cannot itemize anymore, so it is less of a problem. I used to routinely hand out lists printed by these charities about valuations to client. This client just barely got over the standard deduction, so it was more of a help on the state than the federal, since VA is SAF.

[TAXNJ]

Sp, what exactly is your point?? Goodwill Industries is now a reliable tax reference site??

Everyone gets a little white Goodwill "receipt", for each visit. On a GOOD day it will say something like "6 bags of clothing and 3 boxes of household goods." I've seen clients who appear with a handful of the slips and have no idea of what was donated or when.
While not worthless, the receipts are not too far from such. If that is ALL the donor has for a "$5k non-cash contribution," then they are asking for future trouble.

IRS Pub 526 provides these guidelines for valuation of non-cash property and probably carries a bit more weight than a Goodwill receipt:

The following information about the contributed property:

• A description of the property in sufficient detail under the circumstances (taking into account the value of the property) for a person not generally familiar with the type of property to understand that the description is of the contributed property;

The fair market value of the property on the contribution date and the method used in figuring the fair market value;

As for the potential appraisal, good luck on finding an appraiser who will sign off on some bags of clothing / household goods donated to Goodwill with the following required statement:

The appraiser declaration must include the following statement: "I understand that my appraisal will be used in connection with a return or claim for refund. I also understand that, if there is a substantial or gross valuation misstatement of the value of the property claimed on the return or claim for refund that is based on my appraisal, I may be subject to a penalty under section 6695A of the Internal Revenue Code, as well as other applicable penalties. I affirm that I have not been at any time in the 3-year period ending on the date of the appraisal barred from presenting evidence or testimony before the Department of the Treasury or the Internal Revenue Service pursuant to 31 U.S.C. 330(c)."

But, of course, this is all your client's problem. It should be noted that a non-cash donation of used stuff exceeding $5k in value would indicate substantial "original costs" involved. A rough guideline is thrift shop values are in the range of 10% of original cost. So, your client originally paid ~$50k for what was "in good condition" stuff donated? Good luck on that dog adequately hunting!

FE

The reply post was originally meant for BURKE – that was “exactly” the point and to read the particular organization’s policies for donations. So, the reply post to you was just deleted and reassigned to BURKE.

Tried to avoid getting your attempted dissertation of handling donations which can be better found and addressed in The Tax Book and IRS website for tax purposes.

[Burke]

Everyone gets a little white Goodwill "receipt", for each visit. On a GOOD day it will say something like "6 bags of clothing and 3 boxes of household goods." I've seen clients who appear with a handful of the slips and have no idea of what was donated or when.
While not worthless, the receipts are not too far from such. If that is ALL the donor has for a "$5k non-cash contribution," then they are asking for future trouble.

I never accepted those. They MUST itemize the items and assign values as well as tender the original receipts or no deduction.

[Burke]

I still chuckle over the long-ago post from someone who told the TP he couldn't accept just "bags & boxes" as detail, and to take pictures if nothing else as to what he was donating. He came back with a picture of 6 full garbage bags all tied up!

[Dude]

"I have a client who has given me a large number of Goodwill, etc donations. They total over $5,000. Since they are of the same kind (clothes, HH goods) does this necessitate the completion of Part B of 8283? Instructions tend to indicate yes."

I agree. The instructions state "You must also file Form 8283 if you have a group of similar items for which a total deduction of over $500 is claimed" So clothing in general would be similar. https://www.irs.gov/instructions/i8283

"Appraisal?? I am suspect of the FMV estimate and have already notified him of several which he cannot take. When I told him he was short of enough to itemize, he came up with some more."

I use the guide that both goodwill and salvation army publicize for FMV. Clip the itemization of all donations to the reciept from goodwill (which in my experience is usually blank) A tedious process that should be done by the taxpayer but might be worth it in years they itemize. For those who are close to itemizing but not quite there, discuss saving donations for those years you have large medical expenses and or other expenses and donations that may allow you to itemize.

[ttbtaxes]

The taxpayer has to provide the necessary proof of a valid deduction. If clothing or household goods are involved, Section 170(f)(16)(A) requires such property be "in good used condition or better." How is the client who claims they donated bags of clothes going to provide that proof? They should have taken a photo of each item donated. Did they?

Lots of court cases out there and two that raised the "good used condition or better" are T.C. Memo 2015-71, Kunkel and Kunkel v. Commr and T.C. Memo 2014-203, Smith v Commr. Absent the ability to prove that, your client never gets to first base much less home plate.