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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10109
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Is the charitable contribution limit of physical items

Customer Question

Is the charitable contribution limit of physical items grouped into one category (no matter if it's a computer monitor or a french door unit; as well as the receiving entity [ Goodwill, local church, etc])? I read an IRS publication that stated $5,000 is the limit before an appraiser is needed. As a follow up, would citing sources using "fair market value" be an acceptable manner?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

...

Yes, the way IRS puts this is (similar items). IRS will say that this is a "facts an circumstances test" (meaning the closer you are in time, a single contribution of non-cash property to one charity, for example) the closer they will come to see the contribution as a group of similar items (without good documentation)

...

If, however, you document well by providing a statement that delineates (separates) the items and provides detail sufficient to separate them , the more likely you'll not need the appraisal if the TOTAL amount goes over $5000. (The example you gave of a french door unit and a computer - with sufficient description and value estimates - would not be grouped for purposes of needing an appraisal, should the TOTAL go over $5,000).

...

Here's the best practice FOR documentaion:

...

  1. the name of the charity
  2. the location and address of the charity
  3. a description in sufficient detail of the property contributed.

In addition to the above information, your records must also include the following:

  1. the original cost or basis of the property
  2. the fair market value of the property at the time of donation
  3. the method of deriving the property’s fair market value
    1. appraisal
    2. thrift shop value
    3. comparable sales
    4. catalog
    5. ebay
    6. other online auction sales
Customer: replied 1 year ago.
I have a follow-up to your reply: what length of time is used for the facts and circumstances test? Does this same set of standards apply to donating non cash items different charitable groups (if the total exceeds $5000)? If I don't feel the total will exceed $5000, then near the year's end, I find that I've surpassed this total, how is this best handled?(IRS publications seemed grey on this matter).
Expert:  Lane replied 1 year ago.

Yep (not to make light) but "the facts and circumstances test" = grey :0)

...

Receipts with different dates help ... months between help more ... and having given to different charities helps even more

...

I think that if you, again, document that these are very different items, given to different charities, at different times, I think you'll be find (based on the kind of disparity, differences, between items you mentioned in your original question.

...

I WOULD say that being proactive here helps the most (being sure you get the receipts... keeping track of where you are and if toward the end of the year you're getting close, wait until January 1 of the NEXT year to make that donation that takes you over 5000.

...

Sorry if this seems vague, but there ARE no more clear rules (as happens with IRS many times) than the phrase "similar items."

...

The attorney at Nolo.com do a good job of distilling this (I'll underline the pertinent part)

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"An appraisal is required whether you donate one big item or several “similar items” that have a total value of more than $5,000. For example, if you give away a hundred valuable old books, and their total value is more than $5,000, you’ll need an appraisal even though you might think you’re really making a lot of small gifts. The rule applies even if you give the items to different charities."

...

So, again, items that a reasonable, disinterested third party would say are NOT similar (as in your "computer monitor or a french door unit") need not be grouped.

As you get closer to many book or many items of clothing, I think you begin to group (for purposes of the 5000 appraisal requirement)

...

Hope this helps

...

Lane

Expert:  Lane replied 1 year ago.

Yep (not to make light) but "the facts and circumstances test" = grey :0)

...

Receipts with different dates help ... months between help more ... and having given to different charities helps even more

...

I think that if you, again, document that these are very different items, given to different charities, at different times, I think you'll be find (based on the kind of disparity, differences, between items you mentioned in your original question.

...

I WOULD say that being proactive here helps the most (being sure you get the receipts... keeping track of where you are and if toward the end of the year you're getting close, wait until January 1 of the NEXT year to make that donation that takes you over 5000.

...

Sorry if this seems vague, but there ARE no more clear rules (as happens with IRS many times) than the phrase "similar items."

...

The attorney at Nolo.com do a good job of distilling this (I'll underline the pertinent part)

...

"An appraisal is required whether you donate one big item or several “similar items” that have a total value of more than $5,000. For example, if you give away a hundred valuable old books, and their total value is more than $5,000, you’ll need an appraisal even though you might think you’re really making a lot of small gifts. The rule applies even if you give the items to different charities."

...

So, again, items that a reasonable, disinterested third party would say are NOT similar (as in your "computer monitor or a french door unit") need not be grouped.

As you get closer to many books or many items of clothing, I think you begin to group (for purposes of the 5000 appraisal requirement)

...

Hope this helps

...

Lane

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