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IRS.gov Website
Publication 526
taxmap/pubs/p526-003.htm#en_us_publink1000229703

Contributions of Property(p7)

rule
If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. See Giving Property That Has Increased in Value, later.
For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229704

Contributions Subject to 
Special Rules(p7)

rule
Special rules apply if you contributed:
These special rules are described next.
taxmap/pubs/p526-003.htm#en_us_publink1000229705

Clothing and Household Items(p7)

rule
You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better.
taxmap/pubs/p526-003.htm#en_us_publink1000229706

Exception.(p7)

rule
You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return.
taxmap/pubs/p526-003.htm#en_us_publink1000229707

Household items.(p7)

rule
Household items include:
Household items do not include:
taxmap/pubs/p526-003.htm#en_us_publink1000229708

Fair market value.(p8)

rule
To determine the fair market value of these items, use the rules under Determining Fair Market Value, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229709

Cars, Boats, and Airplanes(p8)

rule
The following rules apply to any donation of a qualified vehicle.
A qualified vehicle is:
taxmap/pubs/p526-003.htm#en_us_publink1000229710

Deduction more than $500.(p8)

rule
If you donate a qualified vehicle to a qualified organization and you claim a deduction of more than $500, you can deduct the smaller of:
taxmap/pubs/p526-003.htm#en_us_publink1000229711
Form 1098-C.(p8)
You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle.
If you e-file your return, you must (a) attach Copy B of Form 1098-C to Form 8453 and mail the forms to the IRS, or (b) include Copy B of Form 1098-C as a pdf attachment if your software program allows it.
If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. But if exception 1 or 2 (described next) applies, you must get Form 1098-C (or other statement) within 30 days of your donation.
taxmap/pubs/p526-003.htm#en_us_publink1000248675
Filing deadline approaching and still no Form 1098-C.(p8)
If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices.
  1. Request an automatic 6-month extension of time to file your return. You can get this extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. For more information, see the instructions for Form 4868.
  2. File the return on time without claiming the deduction for the qualified vehicle. After receiving the Form 1098-C, file an amended return, Form 1040X, claiming the deduction. Attach Copy B of Form 1098-C (or other statement) to the amended return.
taxmap/pubs/p526-003.htm#en_us_publink1000229712

Exceptions.(p8)

rule
There are two exceptions to the rules just described for deductions of more than $500.
taxmap/pubs/p526-003.htm#en_us_publink1000229713
Exception 1—vehicle used or improved by organization.(p8)
If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, and you claim a deduction of more than $500, you generally can deduct the vehicle's fair market value at the time of the contribution. But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value, later. The Form 1098-C (or other statement) will show whether this exception applies.
taxmap/pubs/p526-003.htm#en_us_publink1000229714
Exception 2—vehicle given or sold to needy individual.(p8)
If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, and you claim a deduction of more than $500, you generally can deduct the vehicle's fair market value at the time of the contribution. But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value, later. The Form 1098-C (or other statement) will show whether this exception applies.
This exception does not apply if the organization sells the vehicle at auction. In that case, you cannot deduct the vehicle's fair market value.
taxmap/pubs/p526-003.htm#en_us_publink1000229715

Example.(p8)

Anita donates a used car to a qualified organization. She bought it 3 years ago for $9,000. A used car guide shows the fair market value for this type of car is $6,000. However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Neither exception 1 nor exception 2 applies. If Anita itemizes her deductions, she can deduct $2,900 for her donation. She must attach Form 1098-C and Form 8283 to her return.
taxmap/pubs/p526-003.htm#en_us_publink1000229716

Deduction $500 or less.(p8)

rule
If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of:
If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. The statement must contain the information and meet the tests for an acknowledgment described under Deductions of At Least $250 But Not More Than $500 under Records To Keep, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229717

Fair market value.(p8)

rule
To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229718

Donations of inventory.(p8)

rule
The vehicle donation rules just described do not apply to donations of inventory. For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. See Inventory, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229719

Taxidermy Property(p8)

rule
If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property.
Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Your basis does not include transportation or travel costs. It also does not include direct or indirect costs for hunting or killing an animal, such as equipment costs. In addition, it does not include the value of your time.
Taxidermy property means any work of art that:
taxmap/pubs/p526-003.htm#en_us_publink1000229720

Property Subject to a Debt(p8)

rule
If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by:
  1. Any allowable deduction for interest that you paid (or will pay) attributable to any period after the contribution, and
  2. If the property is a bond, the lesser of:
    1. Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or
    2. The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method.
This prevents a double deduction of the same amount as investment interest and also as a charitable contribution.
If the debt is assumed by the recipient (or another person), you must also reduce the fair market value of the property by the amount of the outstanding debt assumed.
If you sold the property to a qualified organization at a bargain price, the amount of the debt is also treated as an amount realized on the sale or exchange of property. For more information, see Bargain Sales under Giving Property That Has Increased in Value, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229721

Partial Interest in Property(p9)

rule
Generally, you cannot deduct a charitable contribution of less than your entire interest in property.
taxmap/pubs/p526-003.htm#en_us_publink1000229722

Right to use property.(p9)

rule
A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible.
taxmap/pubs/p526-003.htm#en_us_publink1000229723

Example 1.(p9)

You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Since you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution.
taxmap/pubs/p526-003.htm#en_us_publink1000229724

Example 2.(p9)

Mandy White owns a vacation home at the beach that she sometimes rents to others. For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Mandy cannot claim a deduction because of the partial interest rule. Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. See Contributions From Which You Benefit, earlier.
taxmap/pubs/p526-003.htm#en_us_publink1000229725

Exceptions.(p9)

rule
You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following listed items.
For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561.
taxmap/pubs/p526-003.htm#en_us_publink1000229726

Fractional Interest in Tangible Personal Property(p9)

rule
You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by:
If you make an additional contribution later, the fair market value of that contribution is the smaller of:
Tangible personal property is defined later under Future Interest in Tangible Personal Property. A fractional interest in property is an undivided portion of your entire interest in the property.
taxmap/pubs/p526-003.htm#en_us_publink1000229727

Example.(p9)

An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property.
taxmap/pubs/p526-003.htm#en_us_publink1000229728

Recapture of deduction.(p9)

rule
You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true.
  1. You contributed a fractional interest in tangible personal property after August 17, 2006.
  2. You do not contribute the rest of your interests in the property to a qualified organization on or before the earlier of:
    1. The date that is 10 years after the date of the initial contribution, or
    2. The date of your death.
Recapture is also required in any case in which the qualified organization has not taken substantial physical possession of the property and used it in a way related to its purpose during the period beginning on the date of the initial fractional contribution and ending on the earlier of:
  1. The date that is 10 years after the date of the initial contribution, or
  2. The date of your death.
taxmap/pubs/p526-003.htm#en_us_publink1000229729
Additional tax.(p9)
If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured.
taxmap/pubs/p526-003.htm#en_us_publink1000254827

Qualified Conservation Contribution(p9)

rule
A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes.
taxmap/pubs/p526-003.htm#en_us_publink1000254828

Qualified organization.(p9)

rule
For purposes of a qualified conservation contribution, a qualified organization is: The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions.
taxmap/pubs/p526-003.htm#en_us_publink1000254829

Qualified real property interest.(p9)

rule
This is any of the following interests in real property.
  1. Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals).
  2. A remainder interest.
  3. A restriction (granted in perpetuity) on the use that may be made of the real property.
taxmap/pubs/p526-003.htm#en_us_publink1000254830

Conservation purposes.(p9)

rule
Your contribution must be made only for one of the following conservation purposes.
taxmap/pubs/p526-003.htm#en_us_publink1000254831

Building in registered historic district.(p9)

rule
If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following three conditions.
  1. The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character.
  2. You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization:
    1. Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and
    2. Has the resources to manage and enforce the restriction and a commitment to do so.
  3. You must include with your return:
    1. A qualified appraisal,
    2. Photographs of the building's entire exterior, and
    3. A description of all restrictions on development of the building, such as zoning laws and restrictive covenants.
If you claimed the rehabilitation credit on Form 3468 for the building for any of the 5 years before the year of the contribution, your deduction is reduced. See section 170(f)(14) of the Internal Revenue Code.
If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions.
taxmap/pubs/p526-003.htm#en_us_publink1000254832

More information.(p10)

rule
For information about determining the fair market value of qualified conservation contributions, see Publication 561. For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions, later. For more information about qualified conservation contributions, see section 1.170A-14 of the regulations.
taxmap/pubs/p526-003.htm#en_us_publink1000229736

Future Interest in Tangible Personal Property(p10)

rule
You may be able to deduct the value of a charitable contribution of a future interest in tangible personal property only after all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. But see Fractional Interest in Tangible Personal Property, earlier, and Tangible personal property put to unrelated use, later.
Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Related organizations may include a partnership or corporation that you have an interest in, or an estate or trust that you have a connection with.
taxmap/pubs/p526-003.htm#en_us_publink1000229737

Tangible personal property.(p10)

rule
This is any property, other than land or buildings, that can be seen or touched. It includes furniture, books, jewelry, paintings, and cars.
taxmap/pubs/p526-003.htm#en_us_publink1000229738

Future interest.(p10)

rule
This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law.
taxmap/pubs/p526-003.htm#en_us_publink1000229739

Example.(p10)

You own an antique car that you contribute to a museum. You give up ownership, but retain the right to keep the car in your garage with your personal collection. Since you keep an interest in the property, you cannot deduct the contribution. If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year.
taxmap/pubs/p526-003.htm#en_us_publink1000229740

Inventory(p10)

rule
If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the smaller of its fair market value on the day you contributed it or its basis. The basis of donated inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. You must remove the amount of your contribution deduction from your opening inventory. It is not part of the cost of goods sold.
If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Treat the inventory's cost as you would ordinarily treat it under your method of accounting. For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year.
A special rule applies to certain donations of food inventory. See Food Inventory, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229741

Patents and Other Intellectual Property(p10)

rule
If you donate a patent or other intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is less. Intellectual property means any of the following:
taxmap/pubs/p526-003.htm#en_us_publink1000229742

Additional deduction based on income.(p10)

rule
You also may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property.
The following table shows the percentage of the organization's income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. In the table, "tax year 1," for example, means your first tax year ending on or after the date of the contribution. However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property.
Tax yearDeductible percentage
1100%
2100%
390%
480%
570%
660%
750%
840%
930%
1020%
1110%
1210%
After the legal life of the patent or other intellectual property ends, or after the 10th anniversary of the donation, no additional deduction is allowed.
The additional deductions cannot be taken for patents or other intellectual property donated to certain private foundations.
taxmap/pubs/p526-003.htm#en_us_publink1000229744

Reporting requirements.(p10)

rule
You are required to inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed.
The organization is required to file an information return showing the income from the property, with a copy to you. This is done on Form 8899, Notice of Income From Donated Intellectual Property.
taxmap/pubs/p526-003.htm#en_us_publink1000229745

Determining 
Fair Market Value(p10)

rule
This section discusses general guidelines for determining the fair market value of various types of donated property. Publication 561 contains a more complete discussion.
Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
taxmap/pubs/p526-003.htm#en_us_publink1000229746

Used clothing.(p10)

rule
The fair market value of used clothing and other personal items is usually far less than the price you paid for them. There are no fixed formulas or methods for finding the value of items of clothing.
You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops.
Also see Clothing and Household Items, earlier.
taxmap/pubs/p526-003.htm#en_us_publink1000229747

Household items.(p10)

rule
The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value.
You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Do not include any of this evidence with your tax return.
If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561.
Also see Clothing and Household Items, earlier.
taxmap/pubs/p526-003.htm#en_us_publink1000229748

Cars, boats, and airplanes.(p11)

rule
If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value.
taxmap/pubs/p526-003.htm#en_us_publink1000229749
Boats.(p11)
Except for inexpensive small boats, the valuation of boats should be based on an appraisal by a marine surveyor because the physical condition is critical to the value.
taxmap/pubs/p526-003.htm#en_us_publink1000229750
Cars.(p11)
Certain commercial firms and trade organizations publish used car pricing guides, commonly called "blue books," containing complete dealer sale prices or dealer average prices for recent model years. The guides may be published monthly or seasonally, and for different regions of the country. These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. The prices are not "official" and these publications are not considered an appraisal of any specific donated property. But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area.
These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. You can also find used car pricing information on the Internet.
To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. However, the fair market value may be less than that amount if the car has engine trouble, body damage, high mileage, or any type of excessive wear. The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated car.
taxmap/pubs/p526-003.htm#en_us_publink1000229751

Example.(p11)

You donate a used car in poor condition to a local high school for use by students studying car repair. A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. However, the guide shows the price for a private party sale of the car is only $750. The fair market value of the car is considered to be $750.
taxmap/pubs/p526-003.htm#en_us_publink1000229752

Large quantities.(p11)

rule
If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold.
taxmap/pubs/p526-003.htm#en_us_publink1000229753

Example.(p11)

You purchase 500 bibles for $1,000. The person who sells them to you says the retail value of these bibles is $3,000. If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Your charitable contribution is $1,000, unless you can show that similar numbers of that bible were selling at a different price at the time of the contribution.
taxmap/pubs/p526-003.htm#en_us_publink1000229754

Giving Property That  
Has Decreased in Value(p11)

rule
If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value. You cannot claim a deduction for the difference between the property's basis and its fair market value.
Your basis in property is generally what you paid for it. If you need more information about basis, get Publication 551, Basis of Assets. You may want to get Publication 551 if you contribute property that you:
Common examples of property that decreases in value include clothing, furniture, appliances, and cars.
taxmap/pubs/p526-003.htm#en_us_publink1000229755

Giving Property That  
Has Increased in Value(p11)

rule
If you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction.
Your basis in property is generally what you paid for it. If you need more information about basis, get Publication 551.
Different rules apply to figuring your deduction, depending on whether the property is:
taxmap/pubs/p526-003.htm#en_us_publink1000229756

Ordinary Income Property(p11)

rule
Property is ordinary income property if its sale at fair market value on the date it was contributed would have resulted in ordinary income or in short-term capital gain. Examples of ordinary income property are inventory, works of art created by the donor, manuscripts prepared by the donor, and capital assets (defined later, under Capital Gain Property) held 1 year or less.
taxmap/pubs/p526-003.htm#en_us_publink1000229757
Property used in a trade or business.(p11)
Property used in a trade or business is considered ordinary income property to the extent of any gain that would have been treated as ordinary income because of depreciation had the property been sold at its fair market value at the time of contribution. See chapter 3 of Publication 544, Sales and Other Dispositions of Assets, for the kinds of property to which this rule applies.
taxmap/pubs/p526-003.htm#en_us_publink1000229758

Amount of deduction.(p11)

rule
The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or short-term capital gain if you sold the property for its fair market value. Generally, this rule limits the deduction to your basis in the property.
taxmap/pubs/p526-003.htm#en_us_publink1000229759

Example.(p11)

You donate stock that you held for 5 months to your church. The fair market value of the stock on the day you donate it is $1,000, but you paid only $800 (your basis). Because the $200 of appreciation would be short-term capital gain if you sold the stock, your deduction is limited to $800 (fair market value minus the appreciation).
taxmap/pubs/p526-003.htm#en_us_publink1000229760
Exception.(p11)
Do not reduce your charitable contribution if you include the ordinary or capital gain income in your gross income in the same year as the contribution. See Ordinary or capital gain income included in gross income under Capital Gain Property, next, if you need more information.
taxmap/pubs/p526-003.htm#en_us_publink1000229761

Capital Gain Property(p11)

rule
Property is capital gain property if its sale at fair market value on the date of the contribution would have resulted in long-term capital gain. Capital gain property includes capital assets held more than 1 year.
taxmap/pubs/p526-003.htm#en_us_publink1000229762

Capital assets.(p11)

rule
Capital assets include most items of property that you own and use for personal purposes or investment. Examples of capital assets are stocks, bonds, jewelry, coin or stamp collections, and cars or furniture used for personal purposes.
For purposes of figuring your charitable contribution, capital assets also include certain real property and depreciable property used in your trade or business and, generally, held more than 1 year. (You may have to treat this property as partly ordinary income property and partly capital gain property.)
taxmap/pubs/p526-003.htm#en_us_publink1000229763
Real property.(p11)
Real property is land and generally anything that is built on, growing on, or attached to land.
taxmap/pubs/p526-003.htm#en_us_publink1000229764
Depreciable property.(p11)
Depreciable property is property used in business or held for the production of income and for which a depreciation deduction is allowed.
For more information about what is a capital asset, see chapter 2 of Publication 544.
taxmap/pubs/p526-003.htm#en_us_publink1000229765

Amount of deduction – general rule.(p11)

rule
When figuring your deduction for a gift of capital gain property, you generally can use the fair market value of the gift.
taxmap/pubs/p526-003.htm#en_us_publink1000229766
Exceptions.(p11)
However, in certain situations, you must 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. Generally, this means reducing the fair market value to the property's cost or other basis. You must do this if:
  1. The property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations,
  2. You choose the 50% limit instead of the special 30% limit for capital gain property, discussed later,
  3. The contributed property is qualified intellectual property (as defined earlier under Patents and Other Intellectual Property),
  4. The contributed property is certain taxidermy property as explained earlier, or
  5. The contributed property is tangible personal property (defined earlier) that:
    1. Is put to an unrelated use (defined later) by the charity, or
    2. Has a claimed value of more than $5,000 and is sold, traded, or otherwise disposed of by the qualified organization during the year in which you made the contribution, and the qualified organization has not made the required certification of exempt use (such as on Form 8282, Part IV). See also Recapture if no exempt use, later.
taxmap/pubs/p526-003.htm#en_us_publink1000229767

Contributions to private nonoperating foundations.(p12)

rule
The reduced deduction applies to contributions to all private nonoperating foundations other than those qualifying for the 50% limit, discussed later.
However, the reduced deduction does not apply to contributions of qualified appreciated stock. Qualified appreciated stock is any stock in a corporation that is capital gain property and for which market quotations are readily available on an established securities market on the day of the contribution. But stock in a corporation does not count as qualified appreciated stock to the extent you and your family contributed more than 10% of the value of all the outstanding stock in the corporation.
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Tangible personal property put to unrelated use.(p12)

rule
The term "tangible personal property" means any property, other than land or buildings, that can be seen or touched. It includes furniture, books, jewelry, paintings, and cars.
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Unrelated use.(p12)
The term "unrelated use" means a use that is unrelated to the exempt purpose or function of the charitable organization. For a governmental unit, it means the use of the contributed property for other than exclusively public purposes.
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Example.(p12)

If a painting contributed to an educational institution is used by that organization for educational purposes by being placed in its library for display and study by art students, the use is not an unrelated use. But if the painting is sold and the proceeds are used by the organization for educational purposes, the use is an unrelated use.
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Deduction limited.(p12)
Your deduction for a contribution of tangible personal property may be limited. See (5) under Exceptions, earlier.
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Recapture if no exempt use.(p12)

rule
You must recapture part of your charitable contribution deduction by including it in your income if all the following statements are true.
  1. You donate tangible personal property with a claimed value of more than $5,000, and your deduction is more than your basis in the property.
  2. The organization sells, trades, or otherwise disposes of the property after the year it was contributed but within 3 years of the contribution.
  3. The organization does not provide a written statement (such as on Form 8282, Part IV), signed by an officer of the organization under penalty of perjury, that either:
    1. Certifies its use of the property was substantial and related to the organization's purpose, or
    2. Certifies its intended use of the property became impossible.
If all the preceding statements are true, include in your income:
  1. The deduction you claimed for the property, minus
  2. Your basis in the property when you made the contribution.
Include this amount in your income for the year the qualified organization disposes of the property. Report the recaptured amount on Form 1040, line 21.
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Ordinary or capital gain income included in gross income.(p12)

rule
You do not reduce your charitable contribution if you include the ordinary or capital gain income in your gross income in the same year as the contribution. This may happen when you transfer installment or discount obligations or when you assign income to a charitable organization. If you contribute an obligation received in a sale of property that is reported under the installment method, see Publication 537, Installment Sales.
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Example.(p12)

You donate an installment note to a qualified organization. The note has a fair market value of $10,000 and a basis to you of $7,000. As a result of the donation, you have a short-term capital gain of $3,000 ($10,000 − $7,000), which you include in your income for the year. Your charitable contribution is $10,000.
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Food Inventory(p12)

rule
Special rules apply to certain donations of food inventory to a qualified organization. These rules apply if all the following conditions are met.
  1. You made a contribution of apparently wholesome food from your trade or business. Apparently wholesome food is food intended for human consumption that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions.
  2. The food is to be used only for the care of the ill, the needy, or infants.
  3. The use of the food is related to the organization's exempt purpose or function.
  4. The organization does not transfer the food for money, other property, or services.
  5. You receive a written statement from the organization stating it will comply with requirements (2), (3), and (4).
  6. The organization is not a private nonoperating foundation.
  7. The food satisfies any applicable requirements of the Federal Food, Drug, and Cosmetic Act and regulations on the date of transfer and for the previous 180 days.
If all the conditions just described are met, use the following worksheet to figure your deduction.
Worksheet 1.
Donations of Food Inventory
(See separate worksheet instructions)
(Keep for your records)
1.Enter fair market value of the
donated food
 
2.Enter basis of the donated
food
 
3.Subtract line 2 from line 1.
If the result is zero or less, stop here. Do not complete the rest of this worksheet. Your charitable contribution deduction for food is the amount on line 1 above
 
4.Enter one-half of line 3 
5.Subtract line 4 from line 1 
6.Multiply line 2 by 2.0 
7.Subtract line 6 from line 5. If the result is less than zero, enter -0- 
8.Add lines 4 and 7 
9.Compare line 3 and line 8. Enter the smaller amount. 
10.Subtract line 9 from line 1 
11.Enter 10% of your total net
income for the year from
all trades or businesses
from which food
inventory was donated
 
12.Compare line 10 and line 11.
Enter the smaller amount.
This is your charitable
contribution deduction
for the food
 
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Worksheet instructions.(p12)

rule
Enter on line 11 of the worksheet 10% of your net income for the year from all sole proprietorships, S corporations, or partnerships (or other entity that is not a C corporation) from which contributions of food inventory were made. Figure net income before any deduction for a charitable contribution of food inventory.
If you made more than one contribution of food inventory, complete a separate worksheet for each contribution. Complete lines 11 and 12 on only one worksheet. On that worksheet, complete line 11. Then compare line 11 and the total of the line 10 amounts on all worksheets and enter the smaller of those amounts on line 12.
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More information.(p12)

rule
See Inventory, earlier, for information about determining the basis of donated inventory and the effect on cost of goods sold. For additional details, see section 170(e)(3) of the Internal Revenue Code.
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Bargain Sales(p12)

rule
A bargain sale of property (a sale or exchange for less than the property's fair market value) to a qualified organization is partly a charitable contribution and partly a sale or exchange.
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Part that is a sale or exchange.(p12)

rule
The part of the bargain sale that is a sale or exchange may result in a taxable gain. For more information on determining the amount of any taxable gain, see Bargain sales to charity in chapter 1 of Publication 544.
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Part that is a charitable contribution.(p13)

rule
Figure the amount of your charitable contribution in three steps.
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Step 1.(p13)
Subtract the amount you received for the property from the property's fair market value at the time of sale. This gives you the fair market value of the contributed part.
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Step 2.(p13)
Find the adjusted basis of the contributed part. It equals: taxmap/pubs/p526-003.htm#en_us_publink1000229784
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Step 3.(p13)
Determine whether the amount of your charitable contribution is the fair market value of the contributed part (which you found in Step 1) or the adjusted basis of the contributed part (which you found in Step 2). Generally, if the property sold was capital gain property, your charitable contribution is the fair market value of the contributed part. If it was ordinary income property, your charitable contribution is the adjusted basis of the contributed part. See the ordinary income property and capital gain property rules (discussed earlier) for more information.
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Example.(p13)

You sell ordinary income property with a fair market value of $10,000 to a church for $2,000. Your basis is $4,000 and your adjusted gross income is $20,000. You make no other contributions during the year. The fair market value of the contributed part of the property is $8,000 ($10,000 − $2,000). The adjusted basis of the contributed part is $3,200 ($4,000 × ($8,000 ÷ $10,000)). Because the property is ordinary income property, your charitable contribution deduction is limited to the adjusted basis of the contributed part. You can deduct $3,200.
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Penalty(p13)

rule
You may be liable for a penalty if you overstate the value or adjusted basis of donated property.
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20% penalty.(p13)

rule
The penalty is 20% of the amount by which you underpaid your tax because of the overstatement, if:
  1. The value or adjusted basis claimed on your return is 150% or more of the correct amount, and
  2. You underpaid your tax by more than $5,000 because of the overstatement.
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40% penalty.(p13)

rule
The penalty is 40%, rather than 20%, if:
  1. The value or adjusted basis claimed on your return is 200% or more of the correct amount, and
  2. You underpaid your tax by more than $5,000 because of the overstatement.