May 10, 2010
Don't Lose Your Deduction For A Noncash Contribution - Find Out What's Required
In order to support noncash charity deductions, individuals must file Form 8283 Noncash Charitable Contributions to support noncash gifts that total more than $500. This form must be filed with the individual’s Form 1040 U.S. Individual Income Tax Return by April 15th (or October 15th for returns on extension).
Form 8283 requires information such as the name and address of the donee organization, description of the property donated, the date contributed, the fair market value, and the method used to determine fair market value. For donated property valued over $5,000, additional information may be required.
Certain donations will require a qualified appraisal which should be maintained for the donor’s records. The appraisal is required to be attached to Form 8283 in certain situations including donations of artwork valued at $20,000 or more, easements on buildings in historic districts, or any contribution for which an individual is claiming a deduction of $500,000 or more.
The appraisal must be dated no earlier than sixty days before the date of the donation and must include a description of the property donated, including the property’s physical condition, and the valuation method used to determine the fair market value, and basis for the valuation. The appraiser must sign Form 8283 on page two in Section III Declaration of Appraiser. The charitable organization is also required to sign Form 8283 for donations greater than $5,000.
The deduction may be disallowed if Form 8283 is not properly completed, or does not include the appropriate attachments or signatures. As noted in the case of Newton J. Friedman v. Commissioner, a 2010 US Tax Court Case, Newton and Vonise Friedman claimed $217,500 in noncash contributions on their 2001 personal income tax return and a similar donation on their 2002 tax return. Although they had received a qualified appraisal, they did so for only one year and only certain items. The taxpayers later tried to remedy the situation by obtaining an appraisal for the remaining donations, however, it was determined that the deductions taken in 2001 and 2002 were disallowed because the appraisals were not timely and the taxpayers failed to comply with the original requirements.
Should you be planning a noncash contribution, contact your MarcumRachlin Tax Professional to assist you with the additional donation support requirements.