Page 166 - Washington Nonprofit Handbook 2018 Edition

Contributions of certain property are subject to special rules under federal
tax law. These include contributions of:

• Clothing or household items;

• A car, boat, or airplane;

• Taxidermy property;

• Property subject to a debt;

• A partial interest in property;

• A fractional interest in tangible personal property.

This chapter will provide general information regarding gifts of property and
some information regarding gifts of vehicles. IRS Publication 526 contains
information regarding the special rules for gifts of the other types of property listed
above.

(ii) Appraisal Requirement

An individual, partnership, or corporation is allowed a deduction for a
charitable contribution greater than $5,000 if the donor obtains a qualified
appraisal of the property and the donor’s return for the taxable year the
contribution was made includes information regarding the property and the
appraisal, as the IRS may require. See Code section 170(f)(11)(C). If the claimed
deduction exceeds $500,000, the donor’s return must include a copy of the
qualified appraisal. See Code section 170(f)(11)(D). These requirements apply to a
C corporation whether or not it is a personal service corporation or closely held
corporation. They do not, however, apply to gifts of cash, inventory property, and

publicly traded securities or to gifts of vehicles, which are governed by different
rules described below. See Code section 170(f)(11)(A)(ii)(I). Also, a taxpayer failing
to meet the requirements may salvage the deduction by showing that the failure is
due to reasonable cause and not to willful neglect. See Code section
170(f)(11)(A)(ii)(II).

For purposes of the appraisal requirements, including the $5,000 and
$500,000 thresholds, all similar items of property donated to one or more
organizations shall be treated as one property. See Code section 170(f)(11)(F). With
respect to a gift by a partnership or S corporation, the requirements apply at the

WASHINGTON NONPROFIT HANDBOOK -155- 2018