How do you value a charitable donation?


Quick Answer

Charitable contributions are valued at an amount equal to the cash donated or the fair market value of the property that is given, notes the Internal Revenue Service. These valuations impact the amount that can be deducted on a tax return.

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Full Answer

Cash, stock, property and even simple household items, such as vacuum cleaners, can be given as charitable contributions, notes Forbes. The donation is not official until all related property receives all documentation to complete the transfer. The actual transfer of money may include a wire transfer, check or cash. Transfer of property may require a title, or proof of ownership, to be included as well. Items other than cash have particular rules relating to their valuation. For instance, any property donated is valued at the fair market value, which is considered the price at which someone can sell the property, as stated by the Internal Revenue Service.

Sufficient documentation is appropriate in valuing charitable contributions and taking the related tax deductions, notes About.com. The donator must obtain a receipt from the institution receiving the charitable donation. The donator is also required to file form 8283 for any non-cash contribution that exceeds $500. Only contributions given to qualified organizations are deductible. Contributions to individual people, professional associations, labor unions and foreign governments are not deductible. Moreover, there are limitations on the amount of charitable contributions that can be deducted. These limitations relate to a taxpayer's adjusted gross income.

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