Deduction for donation of goods

A year ago, I stock up on too much printing paper; so I decided to donate some of them to a senior center. What is the value of my donation for itemized deduction? Market value of the paper? What I paid over a year ago? Some other valuation?

TIA

Reply to
mirss7c1001
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Was your purchase of paper for your business? Did you deduct the cost when you bought the paper?

If so, you've already deduct it. You don't get to do it again.

___ Stu

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Reply to
Stuart A. Bronstein

No, it wasn't for business and therefore was not deducted.

Reply to
NoClue

The value of your donation is either the current fair market value or the amount you paid, whichever is less.

Bob Sandler

Reply to
Bob Sandler

If purchased over a year ago, why is the amount paid relevant?

Seth

Reply to
Seth

I stand corrected. The OP did say that he bought the paper "over a year ago" and that it was not for business use. So the value of the donation is fair market value at the time of the donation, and the amount paid doesn't matter.

Bob Sandler

Reply to
Bob Sandler

The price of paper has gone down? The basic rule of the lesser of FMV or cost doesn't get thrown out the window just because the purchase was more than a year ago.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

If the price has gone up, the paper is considered capital gain property, since it was not purchased for business use and it was held for more than one year, according to the OP. In that case, cost does get "thrown out the window" and the deductible amount is the fair market value. That was Seth's point, and he is correct.

See Pub. 526, "Giving Property That Has Increased in Value." Here are some partial quotes.

"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 include most items of property that you own and use for personal purposes or investment."

"When figuring your deduction for a gift of capital gain property, you generally can use the fair market value of the gift."

Bob Sandler

Reply to
Bob Sandler

It's not relevant to the amount of donation but it could come into play when calculating the maximum allowed donation for the year.

The annual gifts deduction is limited to 50% of AGI for cash or nonappreciated property when given to a 50% organization, but noncash LT appreciated property is limited to 30% of AGI for a 50% org. There's a five-year carryforward for the rest.

And if gifting LT appreciated property, taxpayer may elect to deduct cost basis and be subject to the 50% of AGI rule for that gift.

Reply to
Arthur Kamlet

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