CHARITY CONTRIBUTION

[TAXMAN]

Ok here are the facts. A professional well known white oak basket weaver made a 6 foot tall basket taking 66 hours to make in 1972. The basket was put on display at many shows. When asked was it for sale the answer was always no. Contacted the Guinness book of Records. They responded no category for this item , therefor they could not list it. TP eventually sold basket to a family in 2010 for $1500.00. TP passed away. Family decided to donate basket (2021)to well known museum for display for county culture artifacts. Curator could not appraise the basket because nothing like this had ever been sold. Contacted appraiser's and their answer was the same. Family thinks as a charitable contribution should be at a minimum 3k. What would be your answer to this?

[Lee B]

In order to support a deduction for more than $1,500, there needs to to be support for the item's FMV.

[TAXMAN]

Their in lies the problem. FMV cannot be determined (with reasonable accuracy) except for what local basket maker could only tell family what it would be take to make another one.(66 hrs @ $50.00)=3300.00.

[Lion EA]

What is the basket currently insured for? That could be documentation, maybe. Or, a quote from an auction house or consignment shop, what would they price it at?

[Lion EA]

Was it part of the inventory of the belongings of the deceased for probate or on his estate return? If the estate paid tax on a $3,300 value, then that would be documentation.

If they haven't included a value, or a value no higher than $1,500, before or at death, then they need good documentation now to claim a higher value!

Can't have it both ways!

[Gail in Virginia]

3 hours ago, TAXMAN said:

Their in lies the problem. FMV cannot be determined (with reasonable accuracy) except for what local basket maker could only tell family what it would be take to make another one.(66 hrs @ $50.00)=3300.00.

I think the hours to make times some hourly wage factor would be replacement cost, not necessarily fair market value.  Is the museum that they will donate the item to going to insure it?  How will they determine the value for insurance purposes?  I know more standardized baskets made by a certain company now out of business are not worth as much they once were in my area, BUT this is a one of a kind item and I have no idea how to establish a value unless you can find an appraiser that specializes in unique items of this type, and for an extra couple of thousand dollars in deduction, would it be worth the cost of the appraisal? 

[Sara EA]

Who exactly is going to claim the deduction?  The estate cannot claim the deduction, because it can only deduct donations that come out of income and then only if the will specifies.  The "family" is how many people?  Do any of them even itemize?  This query may be all sound and fury that ends up signifying nothing.

[grandmabee]

Donation = lower of cost or FMV ?  they paid 1500.00  How can you go any higher than that?

[jklcpa]

1 hour ago, grandmabee said:

Donation = lower of cost or FMV ?  they paid 1500.00  How can you go any higher than that?

The person that paid $1,500 back in 2010 has died and family member who inherited the basket is the donor. Basis in the basket is FMV at DOD.

[TAXMAN]

Thanks to all that contributed an answer. I didn't mean to shake up a can of worms just that I had not seen one like this in a long time. 

[Lee B]

I believe the original post, which is kind of unclear, says the person who passed away sold the basket to the to the current owners in 2010 for $ 1,500,

which happens to be the only indication of what the basket is worth.

[grandmabee]

22 hours ago, jklcpa said:

The person that paid $1,500 back in 2010 has died and family member who inherited the basket is the donor. Basis in the basket is FMV at DOD.

I guess I misread it.  "TP eventually sold basket to a family in 2010 for $1500.00. TP passed away. "

[Lion EA]

On 6/20/2022 at 12:59 PM, TAXMAN said:

TP eventually sold basket to a family in 2010 for $1500.00. TP passed away. Family decided to donate basket (2021)to well known museum for display for county culture artifacts.

OK, so a family bought the basket in 2010 for $1,500. One family member passed away? Then the family donated the basket in 2021 to a museum. I don't see any other documentation other than the $1,500 -- IF there's a paper trail for the $1,500.

Are you asking what charitable deductions all the remaining family members receive on their 2021 returns? Without any other documentation, and assuming they kept their purchase documentation, $1,500 divided by the number of remaining family members.

If the family is hoping for more, they have some more legwork and research to do.

[mcbreck]

It's art so you can deduct the lesser of the FMV or the cost basis. This is why art generally gets flushed through a few circular sales before being donated. Bam, that basket is worth $100k.

[Lion EA]

And, the family has some hoops to jump through to provide you with documentation that the FMV has appreciated from the cost basis.