What Is Form 8283 for Noncash Charitable Contributions?

Donating noncash assets to charity can provide tax benefits, but the IRS requires proper documentation to claim deductions. Form 8283 is used to report these contributions and ensure compliance with tax regulations. Failing to complete it correctly may result in denied deductions or additional scrutiny.

Understanding this form is essential for taxpayers who give property, stocks, or other valuables to qualified organizations.

Who Must Use the Form

Taxpayers who donate property valued at more than $500 in a tax year must file Form 8283 with their federal income tax return. This applies to individuals, partnerships, and corporations claiming deductions for noncash charitable contributions.

For contributions exceeding $5,000, donors must obtain a qualified appraisal and complete Section B, which details the appraiser’s credentials and valuation method. Publicly traded securities are an exception and do not require an appraisal regardless of value.

If the donated property is valued above $500,000, the IRS requires the full appraisal report to be attached. Failure to comply can lead to disallowed deductions or penalties.

Noncash Assets That Qualify

Noncash contributions exceeding $500 must be reported. These include real estate, personal property, and securities, each with specific documentation and tax treatment rules.

Real Property

Real estate donations include land, buildings, or other immovable structures given to a qualified charitable organization. The IRS allows deductions based on fair market value (FMV) if the donor has held the asset for more than a year. Otherwise, the deduction is limited to the lesser of FMV or the donor’s cost basis.

If the property carries a mortgage, part of the transaction may be considered a sale, potentially triggering capital gains tax. If the charity sells the property within three years, it must report the sale to the IRS, which could affect the donor’s deduction.

For real estate valued over $5,000, a qualified appraisal is required. If the value exceeds $500,000, the full appraisal report must be attached. Donors must also maintain records proving ownership and how FMV was determined.

Personal Property

Personal property includes vehicles, artwork, jewelry, antiques, and collectibles. The tax treatment depends on whether the charity will use the item for its mission. If a museum receives a painting for display, the donor can deduct FMV. If the charity sells the item, the deduction is limited to cost basis.

For vehicles, if the charity sells the car, boat, or airplane without significant use, the deduction is limited to the sale price rather than FMV. The organization must provide Form 1098-C, detailing the sale amount. If the charity keeps the vehicle for its operations, the donor may claim FMV but must obtain documentation.

For personal property valued over $5,000, a qualified appraisal is necessary. Collectibles such as rare coins or stamps may receive additional IRS scrutiny. Donors should retain purchase history, expert evaluations, and comparable sales data to support their deduction.

Securities

Donating stocks, bonds, or mutual fund shares can provide tax advantages, particularly when the assets have appreciated. If publicly traded securities are held for more than a year, the donor can deduct FMV without paying capital gains tax. If held for a year or less, the deduction is limited to cost basis.

For privately held stock valued over $10,000, a qualified appraisal is required since these shares lack a readily available market price. Closely held business interests, such as S corporation shares or partnership units, may require additional documentation, including financial statements and valuation reports.

If donated securities are restricted due to SEC regulations or contractual agreements, the deduction may be further limited. The IRS requires disclosure of any restrictions on Form 8283 and may adjust the valuation accordingly. If the charity sells the shares within three years, it must report the sale to the IRS.

Valuation Rules

The IRS generally requires FMV to be used, representing the price a willing buyer would pay a willing seller in an open market. However, valuation methods vary depending on the asset type and any restrictions affecting its worth.

For business inventory donations, the deduction is typically limited to cost basis. However, under Internal Revenue Code Section 170(e)(3), C corporations donating inventory for the care of the ill, needy, or infants may qualify for an enhanced deduction.

Partially gifted assets, such as a bargain sale where a donor sells property to a charity for less than FMV, require special valuation considerations. The donor can deduct the difference between FMV and the sale price, but the IRS treats the transaction as part sale, part donation, potentially triggering capital gains tax.

Restricted or illiquid assets, such as intellectual property or privately held business interests, present additional valuation challenges. The IRS requires donors to consider factors like revenue potential, marketability restrictions, and comparable sales data when determining FMV. If future income is expected from the donated asset, such as royalties from a patent, the deduction may be limited to the lesser of FMV or the present value of expected income. Donors must also report any income received from the asset in subsequent years.

Appraisals That Are Required

The IRS mandates appraisals for certain noncash charitable contributions to prevent inflated deductions. A qualified appraisal must be conducted by a professional with verifiable education and experience in valuing the type of property being donated.

Appraisals must be prepared, signed, and dated no earlier than 60 days before the donation and no later than the tax return due date, including extensions. A proper appraisal includes a detailed description of the asset, the valuation method used, relevant market data, and the appraiser’s qualifications. The IRS disallows appraisals based on speculative or unverifiable data.

For example, if a donor contributes a rare book collection, the appraisal should reference recent auction results, professional dealer assessments, and condition grading standards rather than subjective estimates. Failure to obtain an appraisal or using an unqualified appraiser can result in the deduction being denied.

How to Complete the Filing

Properly filling out Form 8283 ensures that noncash charitable contributions are accurately reported. The form is divided into two sections:

– Section A is for donations valued between $501 and $5,000.
– Section B is required for contributions exceeding $5,000 and must include information about the qualified appraisal and appraiser.

Taxpayers must provide the name and address of the charitable organization receiving the donation, along with details about how the asset was acquired. If the contribution falls under Section B, the charity must acknowledge receipt of the donation by signing the form, though this does not confirm the valuation. If multiple items are donated, a separate Form 8283 may be necessary for each category of property.

Documentation Requirements

Maintaining thorough records is necessary to substantiate deductions and avoid IRS scrutiny. Taxpayers should keep copies of Form 8283, appraisal reports, and written acknowledgments from the receiving charity.

For donations exceeding $250, the organization must provide a written acknowledgment that includes a description of the property and a statement confirming whether any goods or services were received in exchange. If benefits were provided, such as event tickets or promotional items, the deductible amount may be reduced.

For complex assets like partnership interests or intellectual property, additional documentation may be required, including financial statements, legal agreements, or valuation reports. If the charity disposes of the donated property within three years, it must file Form 8282 with the IRS, which may prompt a review of the original deduction. Taxpayers should retain all supporting documents for at least three years after filing.