Tangible personal property
By giving tangible personal property to the University, donors may be able to claim a charitable income tax deduction for either the fair market value of the gift or the property’s cost basis (typically the price they paid for it). Gifts of tangible personal property require acceptance in advance by the college or department of the University that will benefit from the gift.
Under IRS rules, donors are responsible for substantiating the value of tangible personal property gifts; the charitable organization cannot provide a valuation for the property. To claim a charitable income tax deduction for gifts valued at more than $250, the IRS requires donors to have a gift acknowledgment from the charitable organization at the time the tax return is submitted.
IRS rules state that:
- Donors making gifts of property valued at more than $500 are required to submit an IRS Form 8283 with their federal income tax returns.
- Donors making gifts of property valued at more than $5,000 are also required to obtain a qualified appraisal and the signature of the charitable organization on Form 8283 verifying that the property has been received.
Non-related use property
According to the IRS, gifts of property that are not related to the charitable organization’s mission are only deductible at the donor’s cost basis or the fair market value, whichever is less. Tangible personal property may be claimed at the fair market value if the charitable organization has a “related use” for the property (a use related to the organization’s tax-exempt mission), and the property is not sold or otherwise disposed of for at least three years.
If the property is sold or disposed of before three years from the gift date, the charitable organization is required to report the sale to the IRS. If the University intends to sell the property, the donor will be notified at the time of the gift.
Artwork and manuscripts
If the total tax deduction claimed for gifts of artwork is more than $20,000, the IRS requires the donor to attach to Form 8283 a complete copy of the qualified appraisal with a photograph of any object valued at more than $20,000. Property created by the donor, e.g., artwork or manuscripts, is only deductible at the donor’s cost basis— typically the cost of the materials used to create the property.
However, donors of such gifts will be recognized by the University for the fair market value of their gifts, even if this value cannot be claimed as a charitable income tax deduction.
Information on this website is not intended as legal or tax advice. For information on how any gift may affect your tax situation, please consult with your own professional advisor.