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Hello and thank you for using Just Answer,Your basis in the art would be it's fair market value on the date of death when you inherited. The amount for the contribution would be it's appraised value when you make the gift. If the value is less than $5000 not written appraisal need be send with the return. If it is valued at more than $5000 you need to send a copy of the written appraisal.
Of course if the value is more then $50,000 you would need to request a statement of value from the IRS
The exact steps you would need to take are really dependent on the value of the donation.
This is not right!! I said that I was GIFTED these works of art, they were NOT inherited.
If gifted to you then your basis is whatever the giver's basis was, so sorry to imply a death in the basis for you.
Let's just clarify please.
I take itemized deductions (don't worry about exceeding 50% of AGI, etc.,
that is not involved. let's say the value of the art was $20,000 when given to
me, and now it is $25,000.
What is my deductible amount on Schedule C??>
$25,000 and you would be required to send a complete copy of the appraisal with your return
The Schedule is A (just to be clear)
Right, Schedule A - So the deductible amount is the FMV at the time I
make the gift to the qualified charitable organization?
Yes, but without the written appraisal (because of the value amount) it would be disallowed. The written appraisal would be required.
Don't worry about written appraisals - I have them for both the time of
the gift in 2003 and now in 2012. In your earlier answer you said
the deductible amount was "the giver's" basis - By "giver"
do you mean me or the person who gave me the gift?
Sorry 2013 is the current appraisal
That is not the deductible amount that is merely your basis. When someone gives something to you you retain whatever basis (purchase amount) they had in the gift.
When I said giver in that statement I was referring to the person that gave you the art.
Your deduction is it's appraised value on the date of the donation.
OK, got that. But putting aside any limitations on charitable deductions
otherwise, if it appraised at $25,000 today, is that my Schedule Adeduction??
I know you stated that you wanted to put aside any limitations but there is one more important issue when a donation such as this is made. If you are donating the art for the charities use (such as to a museum to exhibit) then your deduction at appraisal price is fine. If you are donating this art and they intend to sale it then you may not use the appraisal amount as your deduction.
You would need to reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. This generally means reducing the fair market value to the property's cost or other basis.
OK, thanks. Just to make sure I get this right, one more thing.
Let's say the basis of the art in 2003 when it was gifted to me
was $20,000 (fmv). Now I give it to an institution which is going
to sell it (i.e., a school). FMV at time of gift is $25,000.
SO, my deduction is $20,000, obtained by deducting the $5,000
increase in value from the fmv on the date of donation. Right?? Thanks
Almost, you cannot use FMV when you were given you have to use the purchase price (or basis) of the person that gave the art to you.If they bought it for $20,000 then held and gave to you your basis would be $20000 but if they purchased for less your basis is less and that would mean your deduction is less.
The person who gave it to me inherited the art, but she gave it to me as
a gift while she was still alive.
felt I had to make sure you knew that limitation
Then her basis is still yours so you would have to do a little research
if you know the date of the inheritance by her.
that is going to be very hard. But let's assume in the same scenario
that she inherited it in 1990 and at that time it was worth $15,000
FMV in 2003 when given to me is $20,000.
FMV today when given to charity is $25,000
Deduction amount for me on Sch A??
OK; think I know how you got that.
The inherited value for her would be your basis ($15000)
So if fmv when she inherited was $20,000 and
fmv today is $25,000 my deduction is $5,000. ??
Your deduction is $20,000 (it is the increase in value that is not allowed)
You get to start with your basis (because of the unrelated use rule)
Sorry, I don't think that is consistent with prior scenario
Your basis is determined by her basis
OK, so simply put since her basis is the value on the
date she inherited the art works ($15,000) then the
deduction is $15,000. Sorry if I am somewhat confused
No problem it is confusing
The main thing is the increase in value is not allowed on teh Schedule A
If her basis was $15,000 you get to claim $15000 on the A no matter what the FMV is (unless it dropped in value but let's not complicate further)
You cannot claim a charitable deduction on the amount that the art work increased in value while you held it.
and also any increase in value while the person who gifted it to me held it
You would have gotten a step up in basis had you inherited
then FMV when you got it would be relevant
Glad you came back so we could discuss that further
Your positive rating is always thanks enough.
I really enjoyed working with you – please feel free to request me again when you come back to ask another question.