Goodwill Donations

[Cyclone]

I have a client that moved and in the process cleaned out a lot of stuff.

They are saying the amount they gave to Goodwill amounts to about $6,500. They have the Goodwill receipts with values listed, no pictures of the items donated or anything.

On Form 8283 it says that anything over $5,000 requires an appraisal which should be mailed to the IRS with Form 8453. Does anyone know if it applies to Goodwill items?

I am leaning towards telling the client we can only deduct $4,999.

Thoughts?

[SFA]

Any single item or group of similar items over $5,000 need to have an appraisal. Your client had multiple receipts from multiple days? I don't try to manipulate my clients information or curtail their deductions if they are legitimate. However, I would ask them to review their donation slips and to make a more serious effort to reconstruct exactly what was included in each donation visit and give them thrift shop price guidelines to help them dial in to a more accurate (and honest) list of their donations. Perhaps they can organize their donations into separate group types, such as clothing, furniture, small appliances, kitchen supplies, etc.

In this case, they are way too casual in plopping down a $6,500 figure and expecting you to not push back. They know better.

My Dad always said, "Pigs get fat. Hogs get slaughtered." I think they both end up at the butcher shop, but I got his point.

[Cyclone]

Any single item over $5,000 needs to have an appraisal. Your client had multiple receipts from multiple days? I don't try to manipulate my clients information or curtail their deductions if they are legitimate. However, I would ask them to review their donation slips and to make a more serious effort to reconstruct exactly what was included in each donation visit and give them thrift shop price guidelines to help them dial in to a more accurate (and honest) list of their donations. In this case, they are way too casual in plopping down a $6,500 figure and expecting you to not push back. They know better.

My Dad always said, "Pigs get fat. Hogs get slaughtered." I think they both go to the butcher shop, but I got his point.

Thank you for your reply. The receipts actually total $6,553 and they have 3 kids and wear nice stuff and have lots of toys so I don't doubt they paid over $9,000 or so for them new and the items are probably only a couple years old.

ATX is automatically taking it to page 2 of the 8283 (Section B since it is over $5,000).

I think I am going to advise they just use $4,999....I agree don't want anyone getting slaughtered. She owns a business and I doubt she wants to risk the goodwill deductions causing the IRS to look at other things.

[JohnH]

For amounts this large, they should invest in "It's Deductible" or another of the charitable contributions calculators. It will help them follow some discipline in valuing their donated items. For the most part, a $100 shirt and an $25 shirt will have roughly the same price on them when they get sold at Goodwill. People don't like to hear this, but it's true.

[HV Ken]

Thank you for your reply. The receipts actually total $6,553 and they have 3 kids and wear nice stuff and have lots of toys so I don't doubt they paid over $9,000 or so for them new and the items are probably only a couple years old.

ATX is automatically taking it to page 2 of the 8283 (Section B since it is over $5,000).

I think I am going to advise they just use $4,999....I agree don't want anyone getting slaughtered. She owns a business and I doubt she wants to risk the goodwill deductions causing the IRS to look at other things.

If they paid over $9000, the Goodwill value would most likely not be $6553. What did they base that value on? We use a book called "MONEY For Your Used Clothing" with guaranteed values for non-cash charitable donations. Check out mfyuc.com!

[RitaB]

Yeah, I think FMV is what a willing buyer would pay. I think if a willing buyer existed I'd sell my stuff for $6,500. This will sound strange, but did they make any cash contributions?

I find that the people who most often overstate non-cash contributions are the ones who don't give cash.

[JohnH]

Bingo Rita. And I find that the opposite is often true. People who give generously will frequently understate the value of their non-cash contributions. I'm thinking there's an element of perspective there that a stingy giver lacks.

I'd like to see the deduction for non- cash contributions somehow capped based on a percentage of cash contributions.

[RitaB]

Bingo Rita. And I find that the opposite is often true. People who give generously will frequently understate the value of their non-cash contributions. I'm thinking there's an element of perspective there that a stingy giver lacks.

Another accountant always says, "Zip up your jacket, your heart is falling out." LOL.

[michaelmars]

i doubt fmv is more than 10-25% of any item. that said, if you enter the donation as 2 transactions each under $5k then it should go through.

When my mom passed we had a fmv donation of almost $12k including her furniture, I did have a few appraisals on antiques and furniture to substantiate it. but I still put them down separately so as not to get involved with page 2 or 8283

[imjulier]

Another accountant always says, "Zip up your jacket, your heart is falling out." LOL.

Ah, that's a good one. I've totally noticed that my rich clients donate nothing except old underwear and my poor clients give all but the shirt off their backs.

[Jack from Ohio]

I tell people to use the amount the item would sell for in a garage sale. Most people will take the high amount on the information out there for valuation. I stick to my "garage sale" value. It is the closest to reality.

[JohnH]

What if you told them to take the amount they would PAY for it at a garage sale.

Think the number would change? :)

[RitaB]

What if you told them to take the amount they would PAY for it at a garage sale.

Think the number would change?

This is why you can ride elephants.

[JohnH]

Riding an elephant is easy.

It's the getting on and off that's so difficult.

But still a whole lot easier than getting the right numbers for an 8283 from some clients.

[michaelmars]

Riding an elephant is easy.

It's the getting on and off that's so difficult.

But still a whole lot easier than getting the right numbers for an 8283 from some clients.

NAHHHH its easy, the right number is written on our ceilings.

[kcjenkins]

My Dad always said, "Pigs get fat. Hogs get slaughtered." I think they both end up at the butcher shop, but I got his point.

Not intending to be picky, but the saying should be "Pigs get fed. Hogs get slaughtered." Pigs being small/young hogs.

[ILLMAS]

I like the salvation army thrift value

http://satruck.org/donation-value-guide

[SFA]

Not intending to be picky, but the saying should be "Pigs get fed. Hogs get slaughtered." Pigs being small/young hogs.

Thanks KC. I only wish Dad was still around. That's probably exactly what he said. I sure miss him.

[joanmcq]

Are you entering each separate donation on the 8353?

[kcjenkins]

Thanks KC. I only wish Dad was still around. That's probably exactly what he said. I sure miss him.

Yes, it's funny how well we remember the wisdom they passed down to us. I've used that saying myself, to remind a client that being too greedy is not a wise thing. I learned it from my dear Father, too.