Donors should request a written acknowledgement from the nonprofit for the donated property in the form of a letter, receipt or Form 1098-C. The acknowledgement should also state if the nonprofit provided any goods or services in exchange for the donation. If they did, an estimate of the value of the goods or services should be included. Keep in mind that the donation must be unconditional, and requires the donor to give up control of the donated property to the charity.
Valuing the asset appropriately, choosing a qualifying nonprofit, determining your allowable deduction and securing the required paperwork are all important aspects of donating illiquid assets. With the help of a tax professional, contributing non-cash assets to a nonprofit you support doesn’t have to be complicated and can be a smart option when you’re ready to unload grandma’s antique table or a car that’s collecting dust in storage.
Michael Silvio, CPA, is the director of tax services at Hall & Company CPAs. He can be reached at [email protected] or 949-910-HALL (4255).