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Charitable Noncash Contributions

Two recent cases involving deductions for noncash contributions recently made tax headlines.
Due to these recent developments, Cohick & Associates would like to remind our clients that receipts need to include type of property donated (including age/condition), value of property, or signature of anyone acting on behalf of the person receiving the donation.  As a reminder,  a taxpayer that is unable to provide the acquisition date or the cost basis in the donated property can attach an explanatory statement to the tax return to be excused from these requirements per Regulation 1.170A-13(b)(3)(ii). 

In the second recent case, we learned that even if each donation is less than $250, the IRS takes the similar items of property and the overall donation of multiple drop offs used.  In other words, The Court stated that if you exceed the $500 threshold in each category, the taxpayer had to meet the appraisal requirement for the Clothing and Book categories since they exceeded $5,000.  In this specific case, the court also imposed a 20% negligence penalty.  The taxpayer also failed to maintain reliable written records that included the dates of his contribution, where they were donated, and how he determined the fair market value of the items. 

For more information on these cases go to www.ustaxcourt.gov and enter the following:
Roberta Lee Howe, TC Summary Opinion 2015-26
Kenneth James Kunkel, TC Memo 2015-71