Author Topic: Question about "charitable donations" for tax purposes?  (Read 2803 times)

Miss Growing Green

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Question about "charitable donations" for tax purposes?
« on: January 29, 2014, 12:19:58 PM »
I've tried looking this up all over the internet to no avail... I'm assuming that since my specific question wasn't addressed on any resource I found, that it's "okay" to do.

Here's the question:
Is there a "holding period" for charitable donations?  I.e. would it be okay to take something from a friend, colleague, etc., that they didn't want, so it's now in your possession, then turn around and donate it for the tax deduction?  I've ask quite a few people and they seem split on their answers, but all the people who say "no" can't really cite any good reason for why it isn't okay. 

I know lots of people that take a standard deduction so they have no interest in charitable donation deductions, which only help those who are itemizing.

Input?

P.S. So, technically, if there is no holding period I could have all my friends give all their unwanted stuff to me, and I could donate it all and claim the deduction for myself?
« Last Edit: January 29, 2014, 12:43:05 PM by Miss Growing Green »

catccc

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Re: Question about "charitable donations" for tax purposes?
« Reply #1 on: January 29, 2014, 12:41:49 PM »
I don't believe there is a holding period for charitable deductions.  You could go out and buy a coat, drive to goodwill and donate it.  I don't think it matters how you acquire it.

Frankies Girl

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Re: Question about "charitable donations" for tax purposes?
« Reply #2 on: January 29, 2014, 12:46:16 PM »
If I'm reading your question right, you receive something from friend that they no longer want.

You take possession of said item - it's your property now in other words.

You don't want it either, so you then donate it?

If that's the chain, then you donated an item you had in your possession, so you should theoretically be able to take a deduction for the item.

Once someone gives you something - whether they sold it or gave it away, then it is your property. Not sure if it makes any difference at all if you tell them "I'm just going to donate this" as you are taking possession of the item so it is yours for whatever length of time you had it for.

I've done similar for my mother in the past - she'd give me stuff and I'd flat out tell her I wasn't keeping it, but she'd tell me to take it any way. If it sat in my car or house for a few days or a week or even months, it was still my item to donate at that point. It is through my effort to take said item to the charity, so it still would be my choice (or not) to keep or donate the item in my possession - so I don't really see how it could be interpreted otherwise.


RadicalPersonalFinance

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Re: Question about "charitable donations" for tax purposes?
« Reply #3 on: January 29, 2014, 12:50:34 PM »
If you own the property, you own the property.

Pretend it's cash and follow the logic.

I give you $100 for a birthday gift.  You are now $100 richer.

You give $100 to the United Way.  You may now claim that charitable gift.

The gotchas would be gift tax and properly valuing property.

If someone gives you property valued at greater than $14k in one year, the gift tax must be paid.

Also, make sure that you're carefully and properly valuing the donated property.  Most small donations are probably overvalued.  The IRS has clear rules for assessing value and if you're donating significant property, you want to very carefully follow those rules. Hint: you'll probably need actual appraisals by a qualified appraiser.  That's your responsibility, not the charitable organization's.

MustachianAccountant

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Re: Question about "charitable donations" for tax purposes?
« Reply #4 on: January 29, 2014, 01:16:58 PM »
So, if your NONCASH donations that you're claiming on Sch A is over $500, you have to fill one of these bad boys out:
http://www.irs.gov/pub/irs-pdf/f8283.pdf

You'll notice that there are fields in Section I where you state your "basis" (basically how much you paid for it) and how you acquired your donated property. There are also fields for "Fair Market Value" which is what you get to move over to Schedule A.

All this to say, I've never had a client in this situation, so I don't know what the IRS would do if you received something for free, then claimed a deduction... PROBABLY nothing. I don't see why it would be disallowed.

But do keep in mind that, over $500, you need to disclose that information.

ZMonet

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Re: Question about "charitable donations" for tax purposes?
« Reply #5 on: January 29, 2014, 05:07:20 PM »
MustachianAccountant -- Is it the cumulative value of noncash donations that are over $500 that triggers the Form 8283?  Or that you only complete Form 8283 if a single item you are claiming is over $500?

MustachianAccountant

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Re: Question about "charitable donations" for tax purposes?
« Reply #6 on: January 30, 2014, 07:07:51 AM »
"You must file Form 8283 if the amount of your deduction for all noncash gifts is more than $500."

From the form instructions, under "Who Must File":
http://www.irs.gov/pub/irs-pdf/i8283.pdf