Do You Donate Clothing And Other Items To Charity?

If so, be sure you clearly document exactly what you donated to substantiate the amount you are deducting on your taxes.

In Edmund Douglas Roberts v. Commissioner; T.C. Summ. Op. 2010-76; Memo. 2716-09S (17 June 2010), the Tax Court determined that clothing and other tangible personal property gifts by the taxpayer did not qualify for a deduction due to inadequate substantiation.

Mr. Roberts filed his 2005 tax return 13 months late in June of 2007. He reported a $200 cash charitable contribution and gifts of 450 items of property valued at $28,655. His tax return included Form 8283, Noncash Charitable Contributions and reported gifts of used clothing, towels, bed sheets, books, costume jewelry, children’s toys and glass lamps. The IRS audited the return and assessed a deficiency of $10,482.

The Tax Court noted that gifts of cash are deductible with a cancelled check, receipt or reliable evidence that shows the donee, the date and the amount of the gift. Reg. 1.170A-13(a)(1). The cash gifts by Mr. Roberts did not include any of that required information and he could not identify the date or the specific charity. Therefore, the cash deduction was not appropriately substantiated.

A noncash deduction is permitted provided there is a receipt with the name of the charity, the date and location of the gift, a reasonably detailed description of the property, the fair market value and an explanation of the valuation method. Reg. 1.170A-13(b)(1).

Mr. Roberts did have five receipts from Goodwill. However, only one of the receipts had a signature. None of the receipts included the “reasonably detailed” description of the items. Since there were no adequate descriptions of the items or the method used for valuation, the deductions were denied, with the exception of a small number of items that had been accepted by the Service.

A special thank you to John Rich at Ducks Unlimited for supplying this information.