Article: Non-Monetary Charitable Contribution Deduction
Category: Charitable Donations
An individual can deduct the Fair Market Value of deconstructed materials and/or personal property on the 1040 Schedule A—Itemized Deductions
A corporation can deduct the Fair Market Value of deconstructed materials and/or personal property as a deduction on their 1120 return.
In either deduction scenario, a donor must seek advice from their CPA, tax attorney or tax professional regarding the deductions with regard to their basis in the assets, holding period and any other situations pertinent to their specific tax considerations.
According to IRS guidelines, a donor must obtain a “Qualified Appraisal” produced by a “Qualified Appraiser” if the donation value is greater than $5,000.
The following IRS codifications should be referenced for further information on non-monetary deductions:
· IRS Topic Number 506 – Charitable Contributions
· IRS Publication 561
· IRS Form 8283 Non-Cash Charitable Contributions
· IRS Regulations Section 1.170A-13(c)(3)
· IRS Notice 2006-96, 2006-46 I.R.B. 902
· IRS Tax Exempt Organization Search
· IRS Publication 1771 Charitable Contributions; Substantiation and Disclosure Requirements
· IRS Publication 542 (01/2-19), Corporations
Under the TCJA, the Charitable Contributions deduction has become one of the only malleable deduction on the schedule due to:
· Healthcare Expenses—must exceed 7.5% of AGI and for most families these expenses do not meet threshold
· State and Local Taxes (SALT)—capped at $10,000 meaning taxes paid in excess of this threshold are lost forever and cannot be used as a deduction.
· Miscellaneous Itemized Deductions, which were heretofore subjected to a 2% AGI floor are gone
· Monetary Charitable Contribution limits have been raised to 60% of AGI with a 5-year carry-forward.
· Non-Monetary Contributions remain at 50% of AGI with a 5-year carry-forward
But…here is the kicker:
· The limit on overall itemized deductions has been suspended
This means that in the past, higher income tax payers started to see their total itemized deductions phased out at a rate of $313,800 for MFJ, $287,650 for HOH and $261,500 for Single. This phase-out is suspended meaning donations of building materials and personally property can be implemented as a smart tax-planning strategy for those who can overcome the Standard Deduction threshold and itemize. (SD under TCJA is $24,000 MFJ, $18,000 HOH and $12,000 Single.)
Articles:
IRS guidance on TCJA Changes to Itemized Deductions:
