Are you the Donor or Recipient of a tangible object given to a meaningful nonprofit organization? If so, congratulations! Sharing is a beautiful thing, and there are tax advantages associated with donations of tangible property to qualified charities. Documenting non-cash contributions for the IRS is not always simple and straightforward for taxpayers. Fortunately we are here to help you and your tax advisors properly determine and report the value of your donations according to IRS regulations.
To understand what the taxpayer is expected to submit it is first necessary to know 1. the type of property donated, and 2. an estimate of the property's fair market value. Fair market value (FMV) is the price a willing, knowledgeable buyer would pay a willing, knowledgeable seller when neither has to buy or sell. Usually the taxpayer is allowed to claim a deduction equal to the FMV of the donated tangible property. However, the amount of the deduction can be reduced from the FMV depending on how the property has been used, as well as how the charity plans to use the property in the future.
In the United States, the Internal Revenue Service requires a taxpayer to complete Form 8283 if the taxpayer's total fair market value amount for all noncash gifts in a single tax year is more than $500.00. If the fair market value of the donation is in excess of $5,000.00 an IRS Qualified appraiser must sign IRS Form 8283 for the Donor to file with their tax documents.