52615050ACharitable
ContributionsWhat's New1Introduction2Organizations That Qualify To Receive Deductible Contributions2Contributions You Can Deduct3Contributions You Cannot Deduct6Contributions of Property7When To Deduct11Limits on Deductions12Records To Keep16How To Report18How To Get Tax Help18Index20What's NewContributions of cars, boats, and airplanes.Cars, donations ofBoats, donations ofAirplanes, donations ofPlanes:AirplanesForm:1098-C
If you donate a car, boat, or airplane to a qualified organization after 2004, your deduction generally is limited to the gross proceeds from its
sale by the organization. This rule applies if the claimed value of the donated vehicle is more than $500. For exceptions and more information, see
Cars, Boats and Airplanes under Contributions of Property.
Contributions of patents and other intellectual property.Intellectual property, donations ofPatents, donations of
If you donate a patent or other intellectual property to a qualified organization after June 3, 2004, your deduction is limited to the basis of the
property or the fair market value of the property, whichever is less. You also may be able to claim additional charitable contribution deductions in
the year of the contribution and years following, based on the income, if any, from the donated property. For more information, see Patents and
Other Intellectual Property under Contributions of Property.
Contributions of property over $500,000.
If you claim a deduction of more than $500,000 for a contribution of property made after June 3, 2004, you generally must attach a qualified
appraisal of the property to your return. Previously, the appraisal was required for your records but did not have to be attached to your return. For
more information, see Deduction over $500,000 under How To Report.
Contributions of food inventory.
New rules apply to certain contributions of food inventory made after August 27, 2005, and before January 1, 2006. See Food Inventory.
Temporary suspension of 50% limit.
If you paid a charitable contribution in cash after August 27, 2005, and before January 1, 2006, to certain 50% limit organizations, you can elect
to have the 50% limit not apply. See Temporary Suspension of 50% Limit.
Standard mileage rate increased for Hurricane Katrina.
The standard mileage rate is higher if you used your car in giving services to a charitable organization to provide relief related to Hurricane
Katrina. See Car expenses related to Hurricane Katrina under Out-of-Pocket Expenses in Giving Services.
Mileage reimbursements related to Hurricane Katrina.
You may not have to pay tax on any mileage reimbursements you received from a charitable organization for the costs of using your car to provide
relief related to Hurricane Katrina. See Reimbursements related to Hurricane Katrina under Out-of-Pocket Expenses in Giving
Services.
RemindersDisaster relief.Disaster relief
You can deduct contributions earmarked for flood relief, hurricane relief, or other disaster relief to a qualified organization (defined under
Organizations That Qualify To Receive Deductible Contributions). However, you cannot deduct contributions earmarked for relief of a
particular individual or family.
This publication explains how to claim a deduction for your charitable contributions. It discusses organizations that are qualified to receive
deductible charitable contributions, the types of contributions you can deduct, how much you can deduct, what records to keep, and how to report
charitable contributions.
Charitable contribution, definedA charitable contribution is a donation or gift to, or for the use of, a qualified organization.
It is voluntary and is made without getting, or expecting to get, anything of equal value.
Qualified organizations.
Qualified organizations include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to
prevent cruelty to children or animals. You will find descriptions of these organizations under Organizations That Qualify To Receive Deductible
Contributions.
Form 1040 required.
To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. The amount of your deduction may be limited if
certain rules and limits explained in this publication apply to you.
Comments and suggestions.Comments on publicationSuggestions for publication
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Individual Forms and Publications Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6406
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in
your correspondence.
You can email us at
*taxforms@irs.gov. (The asterisk must be included in the
address.) Please put Publications Comment on the subject line. Although we cannot respond individually to each email, we do appreciate your
feedback and will consider your comments as we revise our tax products.
Tax questions.
If you have a tax question, visit
www.irs.gov or call 1-800-829-1040. We cannot answer tax questions at either
of the addresses listed above.
Ordering forms and publications.
Visit
www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the National Distribution Center at the
address shown under How To Get Tax Help in the back of this publication.
Publication78Cumulative List of Organizations561Determining the Value of Donated PropertyForm (and Instructions)Itemized DeductionsNoncash Charitable Contributions
See How To Get Tax Help near the end of this publication for information about getting these publications and forms.
<ROM>Table 1.</ROM>
<IMARK><BLD>Examples of Charitable Contributions—A Quick Check</BLD>Use the following lists for a quick check of contributions you can or cannot deduct. See the rest of this publication for more information
and additional rules and limits that may apply.Deductible As
Charitable ContributionsNot Deductible As
Charitable ContributionsMoney or property you give to: Money or property you give to:
Churches, synagogues, temples,
mosques, and other religious
organizations
Federal, state, and local
governments, if your contribution is
solely for public purposes (for
example, a gift to reduce the public
debt)
Nonprofit schools and hospitals
Public parks and recreation facilities
Salvation Army, Red Cross, CARE,
Goodwill Industries, United Way, Boy
Scouts, Girl Scouts, Boys and Girls
Clubs of America, etc.
War veterans' groups
Civic leagues, social and sports
clubs, labor unions, and chambers of
commerce
Foreign organizations (except certain
Canadian, Israeli, and Mexican
charities)
Groups that are run for personal
profit
Groups whose purpose is to lobby for
law changes
Homeowners' associations
Individuals
Political groups or candidates for
public office
Expenses paid for a student living with you,
sponsored by a qualified organization
Out-of-pocket expenses when you serve a
qualified organization as a volunteer Cost of raffle, bingo, or lottery tickets
Dues, fees, or bills paid to country clubs,
lodges, fraternal orders, or similar groups
Tuition
Value of your time or services
Value of blood given to a blood bank
Organizations That Qualify To Receive Deductible ContributionsQualified organizationsOrganizations:Organizations:Qualified
You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations other
than churches and governments, as described below, must apply to the IRS.
Publication 78.Publication 78
You can ask any organization whether it is a qualified organization, and most will be able to tell you. Or you can check IRS Publication 78, which
lists most qualified organizations. You may find Publication 78 in your local library's reference section. Or you can find it on the Internet at
www.irs.gov. You can also call the IRS to find out if an organization is
qualified. Call 1-877-829-5500. (For TTY/TDD help, call 1-800-829-4059.)
Types of Qualified Organizations
Generally, only the five following types of organizations can be qualified organizations.
A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the
District of Columbia, or any possession of the United States (including Puerto Rico). It must be organized and operated only for one or more of the
following purposes.
Religious.
Charitable.
Educational.
Scientific.
Literary.
The prevention of cruelty to children or animals.
Certain organizations that foster national or international amateur sports competition also qualify.
War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions.
Domestic fraternal societies, orders, and associations operating under the lodge system.
Note. Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious,
scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.
Certain nonprofit cemetery companies or corporations.
Note. Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum
crypt.
The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or
U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions.
Note. To be deductible, your contribution to this type of organization must be made solely for public purposes.
Example 1. You contribute cash to your city's police department to be used as a reward for information about a crime. The city police
department is a qualified organization, and your contribution is for a public purpose. You can deduct your contribution.
Example 2. You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Because the trust
fund is part of the U.S. Government, you contributed to a qualified organization. You can deduct your contribution.
Examples.
The following list gives some examples of qualified organizations.
Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations.
Most nonprofit charitable organizations such as the Red Cross and the United Way.
Most nonprofit educational organizations, including the Boy (and Girl) Scouts of America, colleges, museums, and day-care centers if
substantially all the child care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the
general public. However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution,
as explained later under Contributions You Cannot Deduct.
Nonprofit hospitals and medical research organizations.
Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with
emergency energy needs.
You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada.
To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. See Publication 597, Information on the
United States–Canada Income Tax Treaty, for information on how to figure your deduction.
Foreign organizations:Mexican
Mexican charities.
You may be able to deduct contributions to certain Mexican charitable organizations under an income tax treaty with Mexico.
The organization must meet tests that are essentially the same as the tests that qualify U.S. organizations to receive deductible contributions.
The organization may be able to tell you if it meets these tests.
If not, you can get general information about the tests the organization must meet by writing to the:
Internal Revenue Service
International Returns Section
P.O. Box 920
Bensalem, PA 19020–8518.
To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. The limits described in Limits on Deductions,
later, apply and are figured using your income from Mexican sources. Those limits also apply to all your charitable contributions, as described
in that discussion.
Israeli charities.Foreign organizations:Israeli
You may be able to deduct contributions to certain Israeli charitable organizations under an income tax treaty with Israel. To qualify for the
deduction, your contribution must be made to an organization created and recognized as a charitable organization under the laws of Israel. The
deduction will be allowed in the amount that would be allowed if the organization was created under the laws of the United States, but is limited to
25% of your adjusted gross income from Israeli sources.
Contributions
You Can Deduct
Generally, you can deduct your contributions of money or property that you make to, or for the use of, a qualified organization. A gift or
contribution is for the use of a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a
similar legal arrangement.
The contributions must be made to a qualified organization and not set aside for use by a specific person.
If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution.
See Contributions of Property, later.
Your deduction for charitable contributions is generally limited to 50% of your adjusted gross income, but in some cases 20% and 30% limits may
apply. In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. See Limits on
Deductions, later.
Table 1 in this publication lists some examples of contributions you can deduct and some that you cannot deduct.
Contributions From
Which You BenefitBenefits received from contributionContributions from which you benefit
If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that
is more than the value of the benefit you receive. Also see Contributions From Which You Benefit under Contributions You Cannot
Deduct, later.
If you pay more than fair market value to a qualified organization for merchandise, goods, or services, the amount you pay that is more than the
value of the item can be a charitable contribution. For the excess amount to qualify, you must pay it with the intent to make a charitable
contribution.
Example 1.
You pay $65 for a ticket to a dinner-dance at a church. All the proceeds of the function go to the church. The ticket to the dinner-dance has a
fair market value of $25. When you buy your ticket, you know that its value is less than your payment. To figure the amount of your charitable
contribution, you subtract the value of the benefit you receive ($25) from your total payment ($65). You can deduct $40 as a charitable contribution
to the church.
Example 2.
At a fund-raising auction conducted by a charity, you pay $600 for a week's stay at a beach house. The amount you pay is no more than the fair
rental value. You have not made a deductible charitable contribution.
Athletic eventsAthletic events.
If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic
event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution.
If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. In that case, subtract the price of
the tickets from your payment. 80% of the remaining amount is a charitable contribution.
Example 1.
You pay $300 a year for membership in an athletic scholarship program maintained by a university (a qualified organization). The only benefit of
membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games.
You can deduct $240 (80% of $300) as a charitable contribution.
Example 2.
The facts are the same as in Example 1 except that your $300 payment included the purchase of one season ticket for the stated ticket price of
$120. You must subtract the usual price of a ticket ($120) from your $300 payment. The result is $180. Your deductible charitable contribution is $144
(80% of $180).
Charity benefit events.Charity benefit events
If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other
benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive.
If there is an established charge for the event, that charge is the value of your benefit. If there is no established charge, your contribution is
that part of your payment that is more than the reasonable value of the right to attend the event. Whether you use the tickets or other privileges has
no effect on the amount you can deduct. However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount
you paid for the ticket.
Even if the ticket or other evidence of payment indicates that the payment is a contribution, this does not mean you can deduct the entire
amount. If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount.
Example.
You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Printed on the ticket is
Contribution–$40. If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price).
Membership fees or dues.Membership fees or dues
You may be able to deduct membership fees or dues you pay to a qualified organization. However, you can deduct only the amount that is more than
the value of the benefits you receive. You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. They are not
qualified organizations.
Certain membership benefits can be disregarded.
Both you and the organization can disregard certain membership benefits you get in return for an annual payment of $75 or less to the qualified
organization. You can pay more than $75 to the organization if the organization does not require a larger payment for you to get the benefits. The
benefits covered under this rule are:
Any rights or privileges, other than those discussed under Athletic events, earlier, that you can use frequently while you are a
member, such as:
Free or discounted admission to the organization's facilities or events,
Free or discounted parking,
Preferred access to goods or services, and
Discounts on the purchase of goods and services.
Admission, while you are a member, to events that are open only to members of the organization if the organization reasonably projects that
the cost per person (excluding any allocated overhead) is not more than a specified amount, which may be adjusted annually for inflation. (This is the
amount for low-cost articles given in the annual revenue procedure with inflation adjusted amounts for the current year. You can get this figure from
the IRS.)
Token items
Token items.
You can deduct your entire payment to a qualified organization as a charitable contribution if both of the following are true.
You get a small item or other benefit of token value.
The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that
you can deduct your payment in full.
The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90–12 and 92–49 and
the revenue procedure with the inflation adjusted amounts for the current year.
Written statement.
A qualified organization must give you a written statement if you make a payment to it that is more than $75 and is partly a contribution and
partly for goods or services. The statement must tell you that you can deduct only the amount of your payment that is more than the value of the goods
or services you received. It must also give you a good faith estimate of the value of those goods or services.
The organization can give you the statement either when it solicits or when it receives the payment from you.
Exception.
An organization will not have to give you this statement if one of the following is true.
The organization is:
The type of organization described in (5) under Types of Qualified Organizations, earlier, or
Formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious
ceremony) that generally is not sold in commercial transactions outside the donative context.
You receive only items whose value is not substantial as described under Token items, earlier.
You receive only membership benefits that can be disregarded, as described earlier.
Expenses Paid for
Student Living With YouStudent:Student:Living with you
You may be able to deduct some expenses of having a student live with you. You can deduct qualifying expenses for a foreign or American student
who:
Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the
organization to provide educational opportunities for the student,
Is not your relative (defined later) or dependent, and
Is a full-time student in the twelfth or any lower grade at a school in the United States.
You can deduct up to $50 a month for each full calendar month the student lives with you. Any month when conditions (1) through (3) above are met
for 15 or more days counts as a full month.
Qualified organization.
For these purposes, a qualified organization can be any of the organizations described earlier under Organizations That Qualify To Receive
Deductible Contributions, except those in (4) and (5). For example, if you are providing a home for a student through a state or local
government agency, you cannot deduct your expenses as charitable contributions.
Relative.
The term relative means any of the following persons.
Your child, stepchild, eligible foster child, or a descendant of any of them (for example, your grandchild). A legally adopted child is
considered your child.
Your brother, sister, half brother, half sister, stepbrother, or stepsister.
Your father, mother, grandparent, or other direct ancestor.
Your stepfather or stepmother.
A son or daughter of your brother or sister.
A brother or sister of your father or mother.
Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
Qualifying expenses.
Expenses that you may be able to deduct include the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment,
and other amounts you actually spend for the well-being of the student.
Expenses that do not qualify.
Depreciation on your home, the fair market value of lodging, and similar items are not considered amounts spent by you. In addition, general
household expenses, such as taxes, insurance, repairs, etc., do not qualify for the deduction.
Reimbursed expenses.
If you are compensated or reimbursed for any part of the costs of having a student living with you, you cannot deduct any of your costs. However,
if you are reimbursed for only an extraordinary or a one-time item, such as a hospital bill or vacation trip, that you paid in advance at the request
of the student's parents or the sponsoring organization, you can deduct your expenses for the student for which you were not reimbursed.
Mutual exchange program.Student:Student:Exchange program
You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a
family in a foreign country.
Reporting expenses.
For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student
living with you under How To Report, later.
Out-of-Pocket Expenses
in Giving ServicesOut-of-pocket expenses
You may be able to deduct some amounts you pay in giving services to a qualified organization. The amounts must be:
Unreimbursed,
Directly connected with the services,
Expenses you had only because of the services you gave, and
Not personal, living, or family expenses.
Table 2 contains questions and answers that apply to some individuals who volunteer their services.
Volunteers
Underprivileged youths selected by charity.Underprivileged youths
You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or
dinners. The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Your own similar expenses in
accompanying the youths are not deductible.
Conventions.Conventions
If you are a chosen representative attending a convention of a qualified organization, you can deduct unreimbursed expenses for travel and
transportation, including a reasonable amount for meals and lodging, while away from home overnight in connection with the convention. However, see
Travel, later.
You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. You also cannot deduct travel, meals and
lodging, and other expenses for your spouse or children.
You cannot deduct your expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative.
You can deduct unreimbursed expenses that are directly connected with giving services for your church during the convention.
Uniforms.Uniforms
You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for
a charitable organization.
Foster parents.Foster parents
You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit
motive in providing the foster care and are not, in fact, making a profit. A qualified organization must designate the individuals you take into your
home for foster care.
You can deduct expenses that meet both of the following requirements.
They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child.
They must be mainly to benefit the qualified organization.
Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can
claim the foster child as a dependent. For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information.
Example.
You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Your unreimbursed expenses
are not deductible as charitable contributions.
Church deacon.Church deacon
You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church.
These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or as
an ordained deacon.
Car expenses.Car expenses
You can deduct unreimbursed out-of-pocket expenses, such as the cost of gas and oil, that are directly related to the use of your car in giving
services to a charitable organization. You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of
tires or insurance.
If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution.
You can deduct parking fees and tolls, whether you use your actual expenses or the standard mileage rate.
You must keep reliable written records of your car expenses. For more information, see Car expenses under Records To Keep,
later.
Car expenses related to Hurricane Katrina.Hurricane Katrina:Car expenses
If you used your car in giving services to a charitable organization to provide relief related to Hurricane Katrina, the standard mileage rate is
29 cents a mile for miles driven after August 24, 2005, and before September 1, 2005. The rate is 34 cents a mile for miles driven after August 31,
2005. The rate for 2006 is 32 cents a mile.
Reimbursements related to Hurricane Katrina.Hurricane KatrinaMileage reimbursements
You may not have to pay tax on any mileage reimbursement you received from a charitable organization for the costs of using your car to provide
relief relating to Hurricane Katrina. This applies to volunteer services only. If you were given compensation for the performance of your services,
this does not apply to you. For details, see Publication 525, Taxable and Nontaxable Income, and Publication 4492, Information for Taxpayers Affected
by Hurricanes Katrina, Rita, and Wilma.
Travel.Travel expenses
Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing
services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. This
applies whether you pay the expenses directly or indirectly. You are paying the expenses indirectly if you make a payment to the charitable
organization and the organization pays for your travel expenses.
The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Even if you enjoy
the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout
the trip. However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel
expenses.
Example 1.
You are a troop leader for a tax-exempt youth group and you help take the group on a camping trip. You are responsible for overseeing the setup of
the camp and for providing adult supervision for other activities during the entire trip. You participate in the activities of the group and really
enjoy your time with them. You oversee the breaking of camp and you help transport the group home. You can deduct your travel expenses.
Example 2.
You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. The project is sponsored by a
charitable organization. In most circumstances, you cannot deduct your expenses.
Example 3.
You work for several hours each morning on an archeological dig sponsored by a charitable organization. The rest of the day is free for recreation
and sightseeing. You cannot take a charitable contribution deduction even though you work very hard during those few hours.
Example 4.
You spend the entire day attending a charitable organization's regional meeting as a chosen representative. In the evening you go to the theater.
You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater.
Daily allowance (per diem).
If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and
lodging while away from home overnight, you must include in income the amount of the allowance that is more than your deductible travel expenses. You
can deduct your necessary travel expenses that are more than the allowance.
<ROM>Table 2.</ROM>
<IMARK><BLD>Volunteers' Questions and Answers</BLD>If you do volunteer work for a qualified organization, the following questions and answers may apply to you. All of the rules explained in
this publication also apply. See, in particular, Out-of-Pocket Expenses in Giving Services.QuestionAnswerI do volunteer work 6 hours a week in the office of a qualified organization. The receptionist is paid $6 an hour to do the same
work I do. Can I deduct $36 a week for my time? No, you cannot deduct the value of your time or services.The office is 30 miles from my home. Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to
getting to and from the place where you are a volunteer. If you do not
want to figure your actual costs, you can deduct 14 cents for each
mile.I volunteer as a Red Cross nurse's aide at a hospital. Can I deduct the cost of uniforms that I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if
the hospital is a qualified organization, the uniforms are not suitable for
everyday use, and you must wear them when volunteering.I pay a baby sitter to watch my children while I do volunteer work for a qualified organization. Can I deduct these costs? No, you cannot deduct payments for child care expenses as a
charitable contribution, even if they are necessary so you can do
volunteer work for a qualified organization. (If you have child care
expenses so you can work for pay, get Publication 503, Child and
Dependent Care Expenses.)
Deductible travel expenses.
These include:
Air, rail, and bus transportation,
Out-of-pocket expenses for your car,
Taxi fares or other costs of transportation between the airport or station and your hotel,
Lodging costs, and
The cost of meals.
Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. For information
on business travel expenses, see Travel Expenses in Publication 463, Travel, Entertainment, Gift, and Car Expenses.
Expenses of Whaling CaptainsWhaling captain
Beginning in 2005, you may be able to deduct as a charitable contribution the reasonable and necessary whaling expenses paid during the year in
carrying out sanctioned whaling activities. The deduction is limited to $10,000 a year. To claim the deduction, you must be recognized by the Alaska
Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities.
Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling
Commission.
Whaling expenses include expenses for:
Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities,
Supplying food for the crew and other provisions for carrying out these activities, and
Storing and distributing the catch from these activities.
To deduct these expenses, you will be required to keep records showing the time, place, date, amount, and nature of the expenses.
Contributions
You Cannot DeductNondeductible contributions
There are some contributions you cannot deduct. There are others you can deduct only part of.
You cannot deduct as a charitable contribution:
A contribution to a specific individual,
A contribution to a nonqualified organization,
The part of a contribution from which you receive or expect to receive a benefit,
The value of your time or services,
Your personal expenses,
Appraisal fees, or
Certain contributions of partial interests in property.
Detailed discussions of these items follow.
Contributions to Individuals
You cannot deduct contributions to specific individuals, including:
Contributions to fraternal societies made for the purpose of paying medical or burial expenses of deceased members.
Contributions to individuals who are needy or worthy. This includes contributions to a qualified organization if you indicate that your
contribution is for a specific person. But you can deduct a contribution that you give to a qualified organization that in turn helps needy or worthy
individuals if you do not indicate that your contribution is for a specific person.
Example. You can deduct contributions earmarked for flood relief, hurricane relief, or other disaster relief to a qualified
organization. However, you cannot deduct contributions earmarked for relief of a particular individual or family.
Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses.
Expenses you paid for another person who provided services to a qualified organization.
Example. Your son does missionary work. You pay his expenses. You cannot claim a deduction for your son's unreimbursed expenses related
to his contribution of services.
Payments to a hospital that are for a specific patient's care or for services for a specific patient. You cannot deduct these payments even
if the hospital is operated by a city, state, or other qualified organization.
Contributions to
Nonqualified OrganizationsNonqualified organizationsOrganizations:Nonqualified
You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following.
Certain state bar associations if:
Bar association
The state bar is not a political subdivision of a state,
The bar has private, as well as public, purposes, such as promoting the professional interests of members, and
Your contribution is unrestricted and can be used for private purposes.
Chambers of commerce and other business leagues or organizations.
Civic leagues and associations.
Communist organizations.
Country clubs and other social clubs.
Foreign organizations other than
Foreign organizations:OtherOrganizations:Foreign
A U.S. organization that transfers funds to a charitable foreign organization if the U.S. organization controls the use of the funds or if
the foreign organization is only an administrative arm of the U.S. organization, or
Certain Canadian, Israeli, or Mexican charitable organizations. See Canadian charities,Mexican charities, and
Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier.
Homeowners' associations.
Labor unions. But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income
limit, on Schedule A (Form 1040). See Publication 529, Miscellaneous Deductions.
Political organizations and candidates.
Contributions From
Which You BenefitBenefits received from contributionContributions from which you benefit
If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot
deduct the part of the contribution that represents the value of the benefit you receive. See Contributions From Which You Benefit under
Contributions You Can Deduct, earlier. These contributions include:
Contributions for lobbying.
Legislation, influencing This includes amounts that you earmark for use in, or in connection with, influencing specific
legislation.
Contributions to a retirement home
Retirement home that are clearly for room, board, maintenance, or admittance. Also, if the amount of your contribution depends
on the type or size of apartment you will occupy, it is not a charitable contribution.
Costs of raffles, bingo, lottery, etc.
Raffle or bingo You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo
or other games of chance. For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in
Publication 529.
Dues to fraternal orders and similar groups. However, see Membership fees or dues under Contributions From Which You
Benefit, earlier.
Tuition,
Tuition or amounts you pay instead of tuition, even if you pay them for children to attend parochial schools or qualifying
nonprofit day-care centers. You also cannot deduct any fixed amount you may be required to pay in addition to the tuition fee to enroll in a private
school, even if it is designated as a donation.
Contributions connected with split-dollar insurance arrangements.
Split-dollar insurance arrangementsYou cannot deduct any part of a contribution to a charitable organization if, in connection
with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or
endowment contract for which you, any member of your family or any other person chosen by you (other than a qualified charitable organization) is a
beneficiary.
Example. You donate money to a charitable organization. The charity uses the money to purchase a cash value life insurance policy. The
beneficiaries under the insurance policy include members of your family. Even though the charity may eventually get some benefit out of the insurance
policy, you cannot deduct any part of the donation.
Value of Time or ServicesTime, value ofServices, value of
You cannot deduct the value of your time or services, including:
Blood donations
Blood donated to the Red Cross or to blood banks, and
The value of income lost while you work as an unpaid volunteer for a qualified organization.
Personal Expenses
You cannot deduct personal, living, or family expenses, such as the following items.
The cost of meals
Meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home
overnight while performing the services.
Adoption expenses,
Adoption expensesAdoption expensesincluding fees paid to an adoption agency and the costs of keeping a child in your home before adoption is
final. However, you may be able to claim a tax credit for these expenses. Also, you may be able to exclude from your gross income amounts paid or
reimbursed by your employer for your adoption expenses. See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. You
also may be able to claim an exemption for the child. See Exemptions for Dependents in Publication 501 for more information.
Appraisal FeesAppraisal fees
Fees that you pay to find the fair market value of donated property are not deductible as contributions. You can claim them, subject to the
2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). See Deductions Subject to the 2% Limit
in Publication 529 for more information.
Partial Interest
in Property
Generally, you cannot deduct a contribution of less than your entire interest in property. For details, see Partial interest in property
under Contributions of Property, later.
Contributions
of PropertyContributions of propertyProperty:Property:Contributions of
If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the
property at the time of the contribution. However, if the property has increased in value, you may have to make some adjustments to the amount of your
deduction. See Giving Property That Has Increased in Value, later.
For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To
Keep and How To Report, later.
Contributions Subject to
Special Rules
Special rules apply if you contributed:
A car, boat, or airplane,
Property subject to a debt,
A partial interest in property,
A future interest in tangible personal property,
Inventory from your business, or
A patent or other intellectual property.
These special rules are described next.
Cars, Boats, and AirplanesCars, donations ofBoats, donations ofAirplanes, donations ofVehicles, donations of
The following rules apply to any donation of a car to a qualified organization after December 31, 2004. These rules also apply to any donation of a
boat, airplane, or any motor vehicle manufactured mainly for use on public streets, roads, and highways.
Deduction more than $500.
If the qualified organization sells the car and you claim a deduction of more than $500, the following rules apply.
You can deduct the smaller of:
The gross proceeds from the sale of the car by the organization, or
The car's fair market value on the date of the contribution. If the car's fair market value was more than your cost or other basis, you may
have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value,
later.
Form:1098-CYou must attach to your return the copy of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes,
(or other statement containing the same information as Form 1098-C) you received from the organization. The Form 1098-C (or other statement) will show
the gross proceeds from the sale of the car.
However, different rules apply if exception 1 or exception 2 (described next) applies.
If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution.
You must get Form 1098-C (or other statement) within 30 days of the sale of the car. However, if you donated the car before September 2, 2005, you
must get Form 1098-C (or other statement) within 30 days of the sale of the car or, if later, October 1, 2005.
Exception 1—vehicle used or improved by organization.
If the qualified organization makes a significant intervening use of or material improvement to the car before transferring it and you claim a
deduction of more than $500, the following rules apply.
You generally can deduct the car's fair market value at the time of the contribution. But if the car's fair market value was more than your
cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has
Increased in Value, later.
You must attach to your return a copy of Form 1098-C (or other statement containing the same information as Form 1098-C).
The Form 1098-C (or other statement) will show whether the qualified organization makes a significant intervening use of or material
improvement to the car.
If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution.
You must get Form 1098-C (or other statement) within 30 days of your donation. However, if you donated the car before September 2, 2005, you have
until October 1, 2005, to get Form 1098-C (or other statement).
Exception 2—vehicle given or sold to needy individual.
If the qualified organization will give the car, or sell it for a price well below fair market value, to a needy individual to further the
organization's charitable purpose, and you claim a deduction of more than $500, the following rules apply.
You generally can deduct the car's fair market value at the time of the contribution. But if the car's fair market value was more than your
cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has
Increased in Value, later.
You must attach to your return a copy of Form 1098-C (or other statement containing the same information as Form 1098-C).
The Form 1098-C (or other statement) will show whether this exception applies.
If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution.
You must get Form 1098-C (or other statement) within 30 days of your donation. However, if you donated the car before September 2, 2005, you have
until October 1, 2005, to get Form 1098-C (or other statement).
Example.
Anita donates a used car to a qualified organization. She bought the car 3 years ago for $9,000. A used car guide shows the fair market value for
this type of car is $6,000. However, Anita gets a Form 1098-C from the organization showing the car was sold for $900. Neither exception 1 nor
exception 2 applies. If Anita itemizes her deductions, she can deduct $900 for her donation. She must attach the Form 1098-C to her return.
Deduction $500 or less.
If the qualified organization sells the car for $500 or less and exceptions 1 and 2 (described earlier) do not apply, the following rules apply.
You can deduct the smaller of:
$500, or
The car's fair market value on the date of the contribution. But if the car's fair market value was more than your cost or other basis, you
may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value,
later.
If the car's fair market value is $250 or more, you must have a written statement from the qualified organization acknowledging your
donation. The statement must contain the information and meet the tests for an acknowledgement described under Deductions of At Least $250 But
Not More Than $500 under Records To Keep, later.
Fair market value.
To determine a car's fair market value, use the rules described under Determining Fair Market Value, later.
Donations of inventory.
The car donation rules just described do not apply to donations of inventory. For example, these rules do not apply if you are a car dealer who
donates a car you had been holding for sale to customers. See Inventory, later.
Property Subject to a DebtProperty:Property:Subject to debt
If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by:
Any allowable deduction for interest that you paid (or will pay) attributable to any period after the contribution, and
If the property is a bond, the lesser of:
Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the
contribution, or
The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not
includible in your income due to your accounting method.
This prevents a double deduction of the same amount as investment interest and also as a charitable contribution.
If the debt is assumed by the recipient (or another person), you must also reduce the fair market value of the property by the amount of the
outstanding debt.
If you sold the property to a qualified organization at a bargain price, the amount of the debt is also treated as an amount realized on the sale
or exchange of property. For more information, see Bargain Sales under Giving Property That Has Increased in Value, later.
Partial Interest in PropertyPartial interests in propertyProperty:Partial interests
Generally, you cannot deduct a charitable contribution (not made by a transfer in trust) of less than your entire interest in property.
Right to use property.Right to use propertyUse of property donatedProperty:Right to use
A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible.
Example 1.
You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Since you still own the building, you
have contributed a partial interest in the property and cannot take a deduction for the contribution.
Example 2.
Mandy White owns a vacation home at the beach that she sometimes rents to others. For a fund-raising auction at her church, she donated the right
to use the vacation home for 1 week. At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the
home for 1 week. Mandy cannot claim a deduction because of the partial interest rule. Lauren cannot claim a deduction either, because she received a
benefit equal to the amount of her payment. See Contributions From Which You Benefit, earlier.
Exceptions.
You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following listed items.
A remainder interest in your personal home or farm. A remainder interest is one that passes to a beneficiary after the end of an earlier
interest in the property.
Example. You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your
death.
An undivided part of your entire interest. This must consist of a part of every substantial interest or right you own in the property and
must last as long as your interest in the property lasts.
Example. You contribute voting stock to a qualified organization but keep the right to vote the stock. The right to vote is a
substantial right in the stock. You have not contributed an undivided part of your entire interest and cannot deduct your contribution.
A partial interest that would be deductible if transferred in trust.
A qualified conservation contribution (defined under Qualified conservation contribution in Publication 561).
For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in
Trust in Publication 561.
Future Interest in Tangible Personal PropertyFuture interests in propertyProperty:Future interests
You can deduct the value of a charitable contribution of a future interest in tangible personal property only after all intervening interests in
and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related
person, or a related organization.
Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Related organizations may include a partnership or
corporation that you have an interest in, or an estate or trust that you have a connection with.
Tangible personal property.
This is any property, other than land or buildings, that can be seen or touched. It includes furniture, books, jewelry, paintings, and cars.
Future interest.
This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law.
Example.
You own an antique car that you contribute to a museum. You give up ownership, but retain the right to keep the car in your garage with your
personal collection. Since you keep an interest in the property, you cannot deduct the contribution. If you turn the car over to the museum in a later
year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year.
InventoryInventoryProperty:Property:Inventory
If you contribute inventory (property that you sell in the course of your business), the amount you can claim as a contribution deduction is the
smaller of its fair market value on the day you contributed it or its basis. The basis of donated inventory is any cost incurred for the inventory in
an earlier year that you would otherwise include in your opening inventory for the year of the contribution. You must remove the amount of your
contribution deduction from your opening inventory. It is not part of the cost of goods sold.
If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable
contribution deduction. Treat the inventory's cost as you would ordinarily treat it under your method of accounting. For example, include the purchase
price of inventory bought and donated in the same year in the cost of goods sold for that year.
A special rule applies to certain donations of food inventory made after August 27, 2005, and before January 1, 2006. See Food Inventory,
later.
Patents and Other Intellectual PropertyIntellectual property, donations ofPatents, donations ofProperty:Intellectual
If you donate a patent or other intellectual property to a qualified organization after June 3, 2004, your deduction is limited to the basis of the
property or the fair market value of the property, whichever is less. Intellectual property means any of the following:
Patents.
Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)).
Trademarks.
Trade names.
Trade secrets.
Know-how.
Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)).
Other similar property or applications or registrations of such property.
Additional deduction based on income.
You also may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the
income, if any, from the donated property.
The following table shows the percentage of the organization's income from the property that you can deduct for each of your tax years ending on or
after the date of the contribution. In the table, tax year 1, for example, means your first tax year ending on or after the date of the
contribution. However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the
amount of the deduction claimed for the original donation of the property.
After the legal life of the patent or other intellectual property ends or after the 10th anniversary of the donation, no additional deduction is
allowed.
The additional deductions cannot be taken for patents or other intellectual property donated to certain private foundations.
Reporting requirements.
You are required to inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the
provisions discussed above.
The organization is required to file an information return showing the income from the property, with a copy to you. This is done on Form 8899,
Notice of Income From Donated Intellectual Property.
Determining
Fair Market ValueFair market valueProperty:Fair market value
This section discusses general guidelines for determining the fair market value of various types of donated property. Publication 561 contains a
more complete discussion.
Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell,
and both having reasonable knowledge of all the relevant facts.
Used clothing.Clothing, fair market value of
The fair market value of used clothing and other personal items is usually far less than the price you paid for them. There are no fixed formulas
or methods for finding the value of items of clothing.
You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops.
Household goods.Household goods, fair market value of
The fair market value of used household goods, such as furniture, appliances, and linens, is usually much lower than the price paid when new. These
items may have little or no market value because they are in a worn condition, out of style, or no longer useful. For these reasons, formulas (such as
using a percentage of the cost to buy a new replacement item) are not acceptable in determining value.
You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Magazine or
newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Do not include any of this
evidence with your tax return.
If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in
Publication 561.
Cars, boats, and airplanes.Cars, fair market valueBoats, fair market value
If you contribute a car, boat, or airplane to a charitable organization you must determine its fair market value.
Boats.
Except for inexpensive small boats, the valuation of boats should be based on an appraisal by a marine surveyor because the physical condition is
critical to the value.
Cars.
Certain commercial firms and trade organizations publish used car pricing guides, commonly called blue books, containing complete dealer
sale prices or dealer average prices for recent model years. The guides may be published monthly or seasonally, and for different regions of the
country. These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. The prices are not
official and these publications are not considered an appraisal of any specific donated property. But they do provide clues for making an
appraisal and suggest relative prices for comparison with current sales and offerings in your area.
These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. You can
also find used car pricing information on the Internet.
To find the fair market value of a car donated after June 3, 2005, use the price listed in a used car guide for a private party sale, not the
dealer retail value. However, the fair market value may be less than that amount if the car has engine trouble, body damage, high mileage, or any type
of excessive wear. The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the
guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar
options or accessories, and with the same or similar warranties as the donated car.
Example.
You donate a used car in poor condition to a local high school for use by students studying car repair. A used car guide shows the dealer retail
value for this type of car in poor condition is $1,600. However, the guide shows the price for a private party sale of the car is only $750. The fair
market value of the car is considered to be $750.
Large quantities.
If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold.
Example.
You purchase 500 bibles for $1,000. The person who sells them to you says the retail value of these bibles is $3,000. If you contribute the bibles
to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Your
charitable contribution is $1,000, unless you can show that similar numbers of that bible were selling at a different price at the time of the
contribution.
Giving Property That
Has Decreased in ValueProperty:Decreased in valueProperty:Basis
If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value. You
cannot claim a deduction for the difference between the property's basis and its fair market value.
Your basis in property is generally what you paid for it. If you need more information about basis, get Publication 551, Basis of Assets. You may
want to get Publication 551 if you contribute property that you:
Received as a gift or inheritance,
Used in a trade, business, or activity conducted for profit, or
Claimed a casualty loss deduction for.
Common examples of property that decreases in value include clothing, furniture, appliances, and cars.
Giving Property That
Has Increased in ValueProperty:Increased in value
If you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount
of appreciation (increase in value) when you figure your deduction.
Your basis in property is generally what you paid for it. If you need more information about basis, get Publication 551.
Different rules apply to figuring your deduction, depending on whether the property is:
Ordinary income property, or
Capital gain property.
A special rule applies to certain donations of food inventory made after August 27, 2005, and before January 1, 2006. See Food Inventory,
later.
Ordinary Income PropertyOrdinary income propertyProperty:Ordinary income
Property is ordinary income property if its sale at fair market value on the date it was contributed would have resulted in ordinary income or in
short-term capital gain. Examples of ordinary income property are inventory, works of art created by the donor, manuscripts prepared by the donor, and
capital assets (defined later, under Capital Gain Property) held 1 year or less.
Property used in a trade or business.
Property used in a trade or business is considered ordinary income property to the extent of any gain that would have been treated as ordinary
income because of depreciation had the property been sold at its fair market value at the time of contribution. See chapter 3 of Publication 544,
Sales and Other Dispositions of Assets, for the kinds of property to which this rule applies.
Amount of deduction.
The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or
short-term capital gain if you sold the property for its fair market value. Generally, this rule limits the deduction to your basis in the property.
Example.
You donate stock that you held for 5 months to your church. The fair market value of the stock on the day you donate it is $1,000, but you paid
only $800 (your basis). Because the $200 of appreciation would be short-term capital gain if you sold the stock, your deduction is limited to $800
(fair market value minus the appreciation).
Exception.
Do not reduce your charitable contribution if you include the ordinary or capital gain income in your gross income in the same year as the
contribution. See Ordinary or capital gain income included in gross income under Capital Gain Property, next, if you need more
information.
Capital Gain PropertyCapital gain propertyProperty:Capital gain
Property is capital gain property if its sale at fair market value on the date of the contribution would have resulted in long-term capital gain.
Capital gain property includes capital assets held more than 1 year.
Capital assets.
Capital assets include most items of property that you own and use for personal purposes or investment. Examples of capital assets are stocks,
bonds, jewelry, coin or stamp collections, and cars or furniture used for personal purposes.
For purposes of figuring your charitable contribution, capital assets also include certain real property and depreciable property used in your
trade or business and, generally, held more than 1 year. (You may have to treat this property as partly ordinary income property and partly capital
gain property.)
Real property.
Real property is land and generally anything that is built on, growing on, or attached to land.
Depreciable property.
Depreciable property is property used in business or held for the production of income and for which a depreciation deduction is allowed.
For more information about what is a capital asset, see chapter 2 of Publication 544.
Amount of deduction – general rule.
When figuring your deduction for a gift of capital gain property, you usually can use the fair market value of the gift.
Exceptions.
However, in certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the
property for its fair market value. Generally, this means reducing the fair market value to the property's cost or other basis. You must do this if:
The property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations,
The contributed property is tangible personal property that is put to an unrelated use by the charity,
You choose the 50% limit instead of the 30% limit, discussed later, or
The contributed property is qualified intellectual property (as defined earlier under Patents and Other Intellectual Property)
donated after June 3, 2004.
Contributions to private nonoperating foundations.
The reduced deduction applies to contributions to all private nonoperating foundations other than those qualifying for the 50% limit, discussed
later.
However, the reduced deduction does not apply to contributions of qualified appreciated stock. Qualified appreciated stock is any stock in a
corporation that is capital gain property and for which market quotations are readily available on an established securities market on the day of the
contribution. But stock in a corporation does not count as qualified appreciated stock to the extent you and your family contributed more than 10% of
the value of all the outstanding stock in the corporation.
Contributions of tangible personal property.
The term tangible personal property means any property, other than land or buildings, that can be seen or touched. It includes furniture,
books, jewelry, paintings, and cars.
The term unrelated useProperty:Unrelated usemeans a use that is unrelated to the exempt purpose or function of the charitable organization. For a
governmental unit, it means the use of the contributed property for other than exclusively public purposes.
Example.
If a painting contributed to an educational institution is used by that organization for educational purposes by being placed in its library for
display and study by art students, the use is not an unrelated use. But if the painting is sold and the proceeds are used by the organization for
educational purposes, the use is an unrelated use.
Ordinary or capital gain income included in gross income.
You do not reduce your charitable contribution if you include the ordinary or capital gain income in your gross income in the same year as the
contribution. This may happen when you transfer installment or discount obligations or when you assign income to a charitable organization. If you
contribute an obligation received in a sale of property that is reported under the installment method, see Publication 537, Installment Sales.
Example.
You donate an installment note to a qualified organization. The note has a fair market value of $10,000 and a basis to you of $7,000. As a result
of the donation, you have a short-term capital gain of $3,000 ($10,000 − $7,000), which you include in your income for the year. Your charitable
contribution is $10,000.
Special rules apply to certain donations of food inventory to a qualified organization. These rules apply if all the following conditions are met.
You made a contribution of apparently wholesome food from your trade or business after August 27, 2005, and before January 1, 2006.
Apparently wholesome food is food intended for human consumption that meets all quality and labeling standards imposed by federal, state, and local
laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other
conditions.
The food is to be used only for the care of the ill, the needy, or infants.
The use of the food is related to the organization's exempt purpose or function.
The organization does not transfer the food for money, other property, or services.
You receive a written statement from the organization stating it will comply with requirements (2), (3), and (4).
The organization is not a private nonoperating foundation.
The food satisfies any applicable requirements of the Federal Food, Drug, and Cosmetic Act and regulations on the date of transfer and for
the previous 180 days.
If all the conditions above are met, use the following worksheet to figure your deduction.
Worksheet 1.Donations of Food Inventory(Keep for your records)1. Enter fair market value of the
donated food2. Enter basis of the donated
food3. Subtract line 2 from line 1.
If the result is less than zero,
skip lines 4 through 6 and
enter the amount from line 1
on line 74. Enter one-half of line 35. Subtract line 4 from line 16. Multiply line 2 by 27. Compare line 5 and line 6.
Enter the smaller amount8. Enter 10% of your total net
income for the year from
all trades or businesses
from which food
inventory was donated9. Compare line 7 and line 8.
Enter the smaller amount.
This is your charitable
contribution deduction
for the food
Worksheet instructions.
Enter on line 8 of the worksheet 10% of your net income for the year from all sole proprietorships, S corporations, or partnerships (or other
entity that is not a C corporation) from which contributions of food inventory were made. Figure net income before any deduction for a charitable
contribution of food inventory.
If you made more than one contribution of food inventory, complete a separate worksheet for each contribution. Complete lines 8 and 9 on only one
worksheet. On that worksheet, complete line 8. Then compare line 8 and the total of the line 7 amounts on all worksheets and enter the smaller of
those amounts on line 9.
Contributions before August 28, 2005, or after 2005.
If you made a charitable contribution of food inventory before August 28, 2005, or after December 31, 2005, these rules do not apply. Instead,
figure your deduction as described under Ordinary Income Property, earlier.
More information.
See Inventory, earlier, for information about determining the basis of donated inventory and the effect on cost of goods sold. For
additional details, see section 170(e)(3) of the Internal Revenue Code.
Bargain SalesBargain salesProperty:Bargain sales
A bargain sale of property to a qualified organization (a sale or exchange for less than the property's fair market value) is partly a charitable
contribution and partly a sale or exchange.
Part that is a sale or exchange.
The part of the bargain sale that is a sale or exchange may result in a taxable gain. For more information on determining the amount of any taxable
gain, see Bargain sales to charity in chapter 1 of Publication 544.
Part that is a charitable contribution.
Figure the amount of your charitable contribution in three steps.
Step 1.
Subtract the amount you received for the property from the property's fair market value at the time of sale. This gives you the fair market value
of the contributed part.
Step 2.
Find the adjusted basis of the contributed part. It equals:
CalculationSummary: This is the calculation used to figure the adjusted basis of the contributable amount of property. To calculate: Multiply the
Adjusted basis of entire property by (the Fair market value of contributed part divided by the Fair market value of entire
property).
Step 3.
Determine whether the amount of your charitable contribution is the fair market value of the contributed part (which you found in Step
1) or the adjusted basis of the contributed part (which you found in Step 2). Generally, if the property sold was capital gain
property, your charitable contribution is the fair market value of the contributed part. If it was ordinary income property, your charitable
contribution is the adjusted basis of the contributed part. See the ordinary income property and capital gain property rules (discussed earlier) for
more information.
Example.
You sell ordinary income property with a fair market value of $10,000 to a church for $2,000. Your basis is $4,000 and your adjusted gross income
is $20,000. You make no other contributions during the year. The fair market value of the contributed part of the property is $8,000 ($10,000 −
$2,000). The adjusted basis of the contributed part is $3,200 ($4,000 × ($8,000 ÷ $10,000)). Because the property is ordinary income
property, your charitable contribution deduction is limited to the adjusted basis of the contributed part. You can deduct $3,200.
Penalty
Penalty, valuation overstatementYou may be liable for a penalty if you overstate the value or adjusted basis of donated
property.
20% penalty.
The penalty is 20% of the amount by which you underpaid your tax because of the overstatement, if:
The value or adjusted basis claimed on your return is 200% or more of the correct amount, and
You underpaid your tax by more than $5,000 because of the overstatement.
40% penalty.
The penalty is 40%, rather than 20%, if:
The value or adjusted basis claimed on your return is 400% or more of the correct amount, and
You underpaid your tax by more than $5,000 because of the overstatement.
When To DeductWhen to deduct
You can deduct your contributions only in the year you actually make them in cash or other property (or in a succeeding carryover year, as
explained under How To Figure Your Deduction When Limits Apply, later). This applies whether you use the cash or an accrual method of
accounting.
Tsunami donations deducted in 2004. If you made a cash contribution in January 2005 for the relief of victims of the December 26, 2004,
Indian Ocean tsunami and chose to deduct it on your 2004 return, you cannot deduct it on your 2005 return.
Time of making contribution.
Usually, you make a contribution at the time of its unconditional delivery.
Checks.
A check that you mail to a charity is considered delivered on the date you mail it.
Credit card.
Contributions charged on your bank credit card are deductible in the year you make the charge.
Pay-by-phone account.
If you use a pay-by-phone account, the date you make a contribution is the date the financial institution pays the amount. This date should be
shown on the statement the financial institution sends to you.
Stock certificate.
The gift to a charity of a properly endorsed stock certificate is completed on the date of mailing or other delivery to the charity or to the
charity's agent. However, if you give a stock certificate to your agent or to the issuing corporation for transfer to the name of the charity, your
gift is not completed until the date the stock is transferred on the books of the corporation.
Promissory note.
If you issue and deliver a promissory note to a charitable organization as a contribution, it is not a contribution until you make the note
payments.
Option.
If you grant an option to buy real property at a bargain price to a charitable organization, you cannot take a deduction until the organization
exercises the option.
Borrowed funds.
If you make a contribution with borrowed funds, you can deduct the contribution in the year you make it, regardless of when you repay the loan.
Conditional gift.
If your contribution is a conditional gift that depends on a future act or event that may not take place, you cannot take a deduction. But if there
is only a negligible chance that the act or event will not take place, you can take a deduction.
If your contribution would be undone by a later act or event, you cannot take a deduction. But if there is only a negligible chance the act or
event will take place, you can take a deduction.
Example 1.
You donate cash to a local school board, which is a political subdivision of a state, to help build a school gym. The school board will refund the
money to you if it does not collect enough to build the gym. You cannot deduct your gift as a charitable contribution until there is no chance of a
refund.
Example 2.
You donate land to a city for as long as the city uses it for a public park. The city does plan to use the land for a park, and there is no chance
(or only a negligible chance) of the land being used for any different purpose. You can deduct your charitable contribution.
Limits on DeductionsLimits on deductionsDeduction limits
If your total contributions for the year are 20% or less of your adjusted gross income, you do not need to read this section. The limits discussed
here do not apply to you.
The amount of your deduction is limited to 50% of your adjusted gross income, and may be limited to 30% or 20% of your adjusted gross income,
depending on the type of property you give and the type of organization you give it to. These limits are described below.
The 50% limit is suspended for certain contributions made in 2005. See Temporary Suspension of 50% Limit, later.
If your contributions are more than any of the limits that apply, see Carryovers under How To Figure Your Deduction When Limits
Apply, later.
Out-of-pocket expenses.Out-of-pocket expenses
Amounts you spend performing services for a charitable organization, which qualify as charitable contributions, are subject to the limit of the
organization. For example, the 50% limit applies to amounts you spend on behalf of a church, a 50% limit organization. These amounts are considered a
contribution to a qualified organization.
Limit on itemized deductions.
The total of your charitable contributions deduction and certain other itemized deductions may be limited if your adjusted gross income is more
than $145,950 ($72,975 if you are married filing separately). This is in addition to the other limits described here. However, this limit does not
apply to qualified contributions (as defined under Temporary Suspension of 50% Limit, later). See the instructions for Schedule A (Form
1040) for more information about this limit.
50% Limit
The 50% limit applies to the total of all charitable contributions you make during the year. This means that your deduction for charitable
contributions cannot be more than 50% of your adjusted gross income for the year. But see Temporary Suspension of 50% Limit, later.
Only limit for 50% organizations.
The 50% limit is the only limit that applies to gifts to organizations listed below under 50% Limit Organizations. But there is one
exception.
Exception.
A 30% limit also applies to these gifts if they are gifts of capital gain property for which you figure your deduction using fair market value
without reduction for appreciation. (See Special 30% Limit for Capital Gain Property, later.)
50% Limit Organizations
You can ask any organization whether it is a 50% limit organization, and most will be able to tell you. Or you may check IRS Publication 78
(described earlier).
Only the following types of organizations are 50% limit organizations.
Churches, and conventions or associations of churches.
Educational organizations with a regular faculty and curriculum that normally have a regularly enrolled student body attending classes on
site.
Hospitals and certain medical research organizations associated with these hospitals.
Organizations that are operated only to receive, hold, invest, and administer property and to make expenditures to or for the benefit of
state and municipal colleges and universities and that normally receive substantial support from the United States or any state or their political
subdivisions, or from the general public.
The United States or any state, the District of Columbia, a U.S. possession (including Puerto Rico), a political subdivision of a state or
U.S. possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions.
Corporations, trusts, or community chests, funds, or foundations organized and operated only for charitable, religious, educational,
scientific, or literary purposes, or to prevent cruelty to children or animals, or to foster certain national or international amateur sports
competition. These organizations must be publicly supported, which means they normally must receive a substantial part of their support, other
than income from their exempt activities, from direct or indirect contributions from the general public or from governmental units.
Organizations that may not qualify as publicly supported under (6) but that meet other tests showing they respond to the needs of the
general public, not a limited number of donors or other persons. They must normally receive more than one-third of their support either from
organizations described in (1) through (6), or from persons other than disqualified persons.
Most organizations operated or controlled by, and operated for the benefit of, those organizations described in (1) through (7).
Private operating foundations.
Private nonoperating foundations that make qualifying distributions of 100% of contributions within 2 months following the
year they receive the contribution. A deduction for charitable contributions to any of these private nonoperating foundations must be supported by
evidence from the foundation confirming that it made the qualifying distributions timely. Attach a copy of this supporting data to your tax return.
A private foundation whose contributions are pooled into a common fund, if the foundation would be described in (8) above but for the right
of substantial contributors to name the public charities that receive contributions from the fund. The foundation must distribute the common fund's
income within 2 months following the tax year in which it was realized and must distribute the corpus not later than 1 year after the
donor's death (or after the death of the donor's surviving spouse if the spouse can name the recipients of the corpus).
Temporary Suspension of
50% Limit
The 50% limit does not apply to your qualified contributions. A qualified contribution is a charitable contribution paid in cash after
August 27, 2005, and before January 1, 2006, to a 50% limit organization (other than a section 509(a)(3) organization) if you make an election to have
the 50% limit not apply to these contributions.
Your deduction for qualified contributions is limited to your adjusted gross income minus your deduction for all other charitable contributions.
You can carry over any contributions you are not able to deduct for 2005 because of this limit. In 2006, treat the carryover of your unused qualified
contributions like a carryover of contributions subject to the 50% limit.
Exception.
You cannot make this election for a contribution to establish a new, or maintain an existing, segregated fund or account for which you (or any
person you appoint or designate) has or expects to have advisory privileges with respect to distributions or investments because of being a donor.
Partners and shareholders.
Each partner in a partnership and each shareholder in an S corporation makes this election separately.
Worksheet.
You may want to use the worksheet on page 14 to figure your deduction if:
You made qualified contributions,
You also made charitable contributions that are not qualified contributions, and
Your total contributions are more than 20% of your adjusted gross income.
30% Limit
A 30% limit applies to the following gifts.
Gifts to all qualified organizations other than 50% limit organizations. This includes gifts to veterans' organizations, fraternal
societies, nonprofit cemeteries, and certain private nonoperating foundations.
Gifts for the use of any organization.
However, if these gifts are of capital gain property, they are subject to the 20% limit, described later, rather than the 30% limit.
Student living with you.Student:Living with you
Amounts you spend on behalf of a student living with you are subject to the 30% limit. These amounts are considered a contribution for the use of a
qualified organization.
Special 30% Limit for
Capital Gain Property
A special 30% limit applies to gifts of capital gain property to 50% limit organizations. (For gifts of capital gain property to other
organizations, see 20% Limit, next.) However, the special 30% limit does not apply when you choose to reduce the fair market value of the
property by the amount that would have been long-term capital gain if you had sold the property. Instead, only the 50% limit applies. See Capital
Gain Property, earlier, and Capital gain property election under How To Figure Your Deduction When Limits Apply, later.
Two separate 30% limits.
This special 30% limit for capital gain property is separate from the other 30% limit. Therefore, the deduction of a contribution subject to one
30% limit does not reduce the amount you can deduct for contributions subject to the other 30% limit. However, the total you deduct cannot be more
than 50% of your adjusted gross income.
Example.
Your adjusted gross income is $50,000. During the year, you gave capital gain property with a fair market value of $15,000 to a 50% limit
organization. You do not choose to reduce the property's fair market value by its appreciation in value. You also gave $10,000 cash to a qualified
organization that is not a 50% limit organization. The $15,000 gift of property is subject to the special 30% limit. The $10,000 cash gift is subject
to the other 30% limit. Both gifts are fully deductible because neither is more than the 30% limit that applies ($15,000 in each case) and together
they are not more than the 50% limit ($25,000).
20% Limit
The 20% limit applies to all gifts of capital gain property to or for the use of qualified organizations (other than gifts of capital gain property
to 50% limit organizations).
How To Figure
Your Deduction
When Limits Apply
If your contributions are subject to more than one of the limits just discussed, you can deduct them as follows.
Contributions subject only to the 50% limit, up to 50% of your adjusted gross income.
Contributions subject to the 30% limit, up to the lesser of:
30% of adjusted gross income, or
50% of adjusted gross income minus your contributions to 50% limit organizations, including contributions of capital gain property subject
to the special 30% limit.
Contributions of capital gain property subject to the special 30% limit, up to the lesser of:
30% of adjusted gross income, or
50% of adjusted gross income minus your other contributions to 50% limit organizations.
Contributions subject to the 20% limit, up to the lesser of:
20% of adjusted gross income,
30% of adjusted gross income minus your contributions subject to the 30% limit,
30% of adjusted gross income minus your contributions of capital gain property subject to the special 30% limit, or
50% of adjusted gross income minus the total of your contributions to 50% limit organizations and your contributions subject to the 30%
limit.
If more than one of the limits described above limit your deduction for charitable contributions, you may want to use Worksheet 2 on page 14 to
figure your deduction and your carryover.
Example.
Your adjusted gross income is $50,000. In May, you gave your church $2,000 cash and land with a fair market value of $28,000 and a basis of
$22,000. You held the land for investment purposes. You do not choose to reduce the fair market value of the land by the appreciation in value. You
also gave $5,000 cash to a private foundation to which the 30% limit applies.
The $2,000 cash donated to the church is considered first and is fully deductible. Your contribution to the private foundation is considered next.
Because your contributions to 50% limit organizations ($2,000 + $28,000) are more than $25,000 (50% of $50,000), your contribution to the private
foundation is not deductible for the year. It can be carried over to later years. See Carryovers, later. The gift of land is considered
next. Your deduction for the land is limited to $15,000 (30% × $50,000). The unused part of the gift of land ($13,000) can be carried over. For
this year, your deduction is limited to $17,000 ($2,000 + $15,000).
A Filled-In Worksheet 2 on page 15 shows this computation in detail.
Table 3. Worksheet for Limit on DeductionsSummary: This is an example of the worksheet used to determine the limit on deductions (if any) that can be claimed by a taxpayer. The line
items to be completed are:Under
Step 1. List your charitable contributions made during the year.:1. Enter your contributions to 50% limit organizations. (Include contributions of capital gain property if you reduced the property's fair
market value. Do not include contributions of capital gain property deducted at fair market value.) field2. Enter your contributions to 50% limit organizations of capital gain property deducted at fair market value field3. Enter your contributions (other than of capital gain property) to qualified organizations that are not 50% limit organizations
field4. Enter your contributions for the use of any qualified organization. (But do not enter here any amount that must be entered on line
6.) field5. Add lines 3 and 4 field6. Enter your contributions of capital gain property to or for the use of any qualified organization. (But do not enter here any amount
entered on line 1 or 2.) fieldUnder
Step 2. Figure your deduction for the year and your carryover to the next year.:7. Enter your adjusted gross income field8. Multiply line 7 by 0.5. This is your 50% limit fieldContributions to 50% limit organizations:9. Enter the smaller of line 1 or line 8--Deduct this year field10. Subtract line 9 from line 1--Carryover to next year field11. Subtract line 9 from line 8 fieldContributions not to 50% limit organizations:12. Add lines 1 and 2 field13. Multiply line 7 by 0.3. This is your 30% limit field14. Subtract line 12 from line 8 field15. Enter the smallest of line 5, 13, or 14--Deduct this year field16. Subtract line 15 from line 5--Carryover to next year field17. Subtract line 15 from line 13 fieldContributions of capital gain property to 50% limit organizations:18. Enter the smallest of line 2, 11, or 13--Deduct this year field19. Subtract line 18 from line 2--Carryover to next year field20. Subtract line 15 from line 14 field21. Subtract line 18 from line 13 fieldContributions of capital gain property not to 50% limit organizations:22. Multiply line 7 by 0.2. This is your 20% limit field23. Enter the smallest of line 6, 17, 20, 21, or 22--Deduct this year field24. Subtract line 23 from line 6--Carryover to next year fieldUnder
Step 3. Summarize your deductions and carryovers.:25. Add lines 9, 15, 18, and 23. Enter the total here and on Schedule A (Form 1040)--Deduct this year field26. Add lines 10, 16, 19, and 24. Enter the total here. Carry it forward to Schedule A next year--Carryover over to next year
fieldTable 4. Filled-In Worksheet for Limit on DeductionsSummary: This is an example of the worksheet used to determine the limit on deductions (if any) that can be claimed as pertains to the text.
The completed line items are:Under
Step 1. List your charitable contributions made during the year.:1. Enter your contributions to 50% limit organizations. (Include contributions of capital gain property if you reduced the property's fair
market value. Do not include contributions of capital gain property deducted at fair market value.) field contains 2,0002. Enter your contributions to 50% limit organizations of capital gain property deducted at fair market value field contains
28,0003. Enter your contributions (other than of capital gain property) to qualified organizations that are not 50% limit organizations
field contains 5,0004. Enter your contributions for the use of any qualified organization. (But do not enter here any amount that must be entered on line
6.) field contains 05. Add lines 3 and 4 field contains 5,0006. Enter your contributions of capital gain property to or for the use of any qualified organization. (But do not enter here any amount
entered on line 1 or 2.) field contains 0Under
Step 2. Figure your deduction for the year and your carryover to the next year.:7. Enter your adjusted gross income field contains 50,0008. Multiply line 7 by 0.5. This is your 50% limit field contains 25,000Contributions to 50% limit organizations:9. Enter the smaller of line 1 or line 8--Deduct this year field contains 2,00010. Subtract line 9 from line 1--Carryover to next year field contains 011. Subtract line 9 from line 8 field contains 23,000Contributions not to 50% limit organizations:12. Add lines 1 and 2 field contains 30,00013. Multiply line 7 by 0.3. This is your 30% limit field contains 15,00014. Subtract line 12 from line 8 field contains 015. Enter the smallest of line 5, 13, or 14--Deduct this year field contains 016. Subtract line 15 from line 5--Carryover to next year field contains 5,00017. Subtract line 15 from line 13 field contains 15,000Contributions of capital gain property to 50% limit organizations:18. Enter the smallest of line 2, 11, or 13--Deduct this year field contains 15,00019. Subtract line 18 from line 2--Carryover to next year field contains 13,00020. Subtract line 15 from line 14 field contains 021. Subtract line 18 from line 13 field contains 0Contributions of capital gain property not to 50% limit organizations:22. Multiply line 7 by 0.2. This is your 20% limit field contains 10,00023. Enter the smallest of line 6, 17, 20, 21, or 22--Deduct this year field contains 024. Subtract line 23 from line 6--Carryover to next year field contains 0Under
Step 3. Summarize your deductions and carryovers.:25. Add lines 9, 15, 18, and 23. Enter the total here and on Schedule A (Form 1040)--Deduct this year field contains 17,00026. Add lines 10, 16, 19, and 24. Enter the total here. Carry it forward to Schedule A next year--Carryover over to next year field
contains 18,000
Capital gain property election.Property:Capital gain election
