Page 77 - Virtual Currencies

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Also see Clothing and Household Items, clues for making an appraisal and suggest rela- Giving Property That Has
earlier. tive prices for comparison with current sales Increased in Value
Example. Z donated a coat to a thrift store and offerings in your area.
These publications are sometimes available
operated by their church. Z paid $300 for the from public libraries, or from the loan officer at a If you contribute property with a FMV that is
coat 3 years ago. Similar coats in the thrift store bank, credit union, or finance company. You more than your basis in it, you may have to re-
sell for $50. The FMV of the coat is $50. Z’s can also find used car pricing information on the duce the FMV by the amount of appreciation
donation is limited to $50. Internet. (increase in value) when you figure your deduc-
tion.
To find the FMV of a donated car, use the
Household items. The FMV of used house- price listed in a used car guide for a private Your basis in property is generally what you
hold items, such as furniture, appliances, and party sale, not the dealer retail value. However,
linens, is usually much lower than the price paid the FMV may be less if the car has engine trou- paid for it. If you need more information about
basis, see Pub. 551.
when new. These items may have little or no ble, body damage, high mileage, or any type of
market value because they are in a worn condi- excessive wear. The FMV of a donated car is Different rules apply to figuring your deduc-
tion, out of style, or no longer useful. For these the same as the price listed in a used car guide tion, depending on whether the property is:
reasons, formulas (such as using a percentage for a private party sale only if the guide lists a • Ordinary income property, or
of the cost to buy a new replacement item) sales price for a car that is the same make, • Capital gain property.
aren't acceptable in determining value. model, and year, sold in the same area, in the
You should support your valuation with pho- same condition, with the same or similar op- Ordinary Income Property
tographs, canceled checks, receipts from your tions or accessories, and with the same or simi-
purchase of the items, or other evidence. Maga- lar warranties as the donated car. Property is ordinary income property if you
zine or newspaper articles and photographs would have recognized ordinary income or
that describe the items and statements by the Example. You donate a used car in poor short-term capital gain had you sold it at FMV
recipients of the items are also useful. Don't in- condition to a local high school for use by stu- on the date it was contributed. Examples of or-
clude any of this evidence with your tax return. dents studying car repair. A used car guide dinary income property are inventory, works of
If the property is valuable because it is old or shows the dealer retail value for this type of car art created by the donor, manuscripts prepared
unique, see the discussion under Paintings, An- in poor condition is $1,600. However, the guide by the donor, and capital assets (defined later,
tiques, and Other Objects of Art in Pub. 561. shows the price for a private party sale of the under Capital Gain Property) held 1 year or
Also see Clothing and Household Items, car is only $750. The FMV of the car is consid- less.
earlier. ered to be $750. Property used in a trade or business.
Article of clothing or household item Large quantities. If you contribute a large Property used in a trade or business is consid-
over $500 not in good used condition. Form number of the same item, FMV is the price at ered ordinary income property to the extent of
8283, Section B, must be completed and the which comparable numbers of the item are be- any gain that would have been treated as ordi-
Form 8283 attached to the tax return if you are ing sold. nary income because of depreciation had the
contributing a single article of clothing or house- property been sold at its FMV at the time of con-
hold item over $500 that is not in good used Example. You purchase 500 copies of a tribution. See chapter 3 of Pub. 544, Sales and
condition. See the Form 8283 instructions for religious book for $1,000. The person who sells Other Dispositions of Assets, for the kinds of
more information. them to you says the retail value of these books property to which this rule applies.
Cars, boats, and airplanes. If you contribute is $3,000. If you contribute the books to a quali- Amount of deduction. The amount you can
fied organization, you can claim a deduction
a car, boat, or airplane to a qualified organiza- only for the price at which similar numbers of deduct for a contribution of ordinary income
tion, you must determine its FMV. the same books are currently being sold. Your property is its FMV minus the amount that
Qualified vehicle donation. You don’t charitable contribution is $1,000, unless you would be ordinary income or short-term capital
need a written appraisal for a qualified vehi- can show that similar numbers of that book gain if you sold the property for its FMV. Gener-
cle — such as a car, boat, or airplane — if your were selling at a different price at the time of the ally, this rule limits the deduction to your basis
in the property.
deduction for the qualified vehicle is limited to contribution.
the gross proceeds from its sale and you ob- Example. You donate stock you held for 5
tained a contemporaneous written acknowledg- Giving Property That Has months to your synagogue. The FMV of the
ment (CWA), defined later. If you donate a Decreased in Value stock on the day you donate it is $1,000, but
qualified vehicle with a claimed value of more you paid only $800 (your basis). Because the
than $500, you can’t claim a deduction unless If you contribute property with a FMV that is less $200 of appreciation would be short-term capi-
you attach to Form 8283 a copy of the CWA you than your basis in it, your deduction is limited to tal gain if you sold the stock, your deduction is
received from the donee organization. See its FMV. You can't claim a deduction for the dif- limited to $800 (FMV minus the appreciation).
Qualified Vehicle Donations in the Instructions ference between the property's basis and its
for Form 8283. FMV. Exception. Don't reduce your charitable
Boats. Except for small, inexpensive Your basis in property is generally what you contribution if you include the ordinary or capital
gain income in your gross income in the same
boats, the valuation of boats should be based paid for it. If you need more information about year as the contribution. See Ordinary or capital
on an appraisal by a marine surveyor or ap- basis, see Pub. 551, Basis of Assets. You may gain income included in gross income under
praiser because the physical condition is critical want to see Pub. 551 if you contribute property Capital Gain Property next, if you need more in-
to the value. that you: formation.
Cars. Certain commercial firms and trade • Received as a gift or inheritance;
organizations publish used car pricing guides, • Used in a trade, business, or activity con- Capital Gain Property
commonly called “blue books,” containing com- ducted for profit; or
plete dealer sale prices or dealer average pri- • Claimed a casualty loss deduction for. Property is capital gain property if you would
ces for recent model years. The guides may be Common examples of property that de- have recognized long-term capital gain had you
published monthly or seasonally, and for differ- crease in value include clothing, furniture, appli- sold it at FMV on the date of the contribution.
ent regions of the country. These guides also ances, and cars. Capital gain property includes capital assets
provide estimates for adjusting for unusual held more than 1 year.
equipment, unusual mileage, and physical con-
dition. The prices aren't “official” and these pub- Capital assets. Capital assets include most
lications aren't considered an appraisal of any items of property you own and use for personal
specific donated property. But they do provide purposes or investment. Examples of capital
Publication 526 (2022) Page 11