Duncan Bass v. Comm., TCM 2023-41
This post is part of our series on recent important tax cases that may be of interest to accounting, tax, and finance professionals. For more like this, see our Federal Tax Update and California Federal Tax Update, which offer a comprehensive analysis of the year’s most pivotal tax developments.
Non-Cash Donations of More Than $5,000 Require an Appraisal (Duncan Bass v. Comm., TCM 2023-41)
Duncan Bass made noncash charitable gifts in 2017 to Goodwill, the Salvation Army, and Lend-A-Hand, which were reported on three Forms 8283 attached to his tax return. According to the Form 8283, the gifts to Goodwill had an appraised fair market value of $10,286 and were purchased for $4,360, while the gifts to the Salvation Army had an appraised fair market value of $10,060 and were purchased for $4,175. The gifts to Lend-A-Hand had an appraised fair market value of $10,340 and were purchased for $4,440. For the gifts, in Section B Part I, “Information on Donated Property,” Mr. Bass indicated that he had donated “various” property in “good used” condition.
Similar items of property are treated as one property. For any noncash charitable contribution exceeding $5,000, the donor is required to obtain a “qualified appraisal” for the property contributed. Relying on the fact that he made 173 separate trips to Goodwill and the Salvation Army and received a donation acknowledgment receipt for each trip, at trial Mr. Bass testified that because the donated items reflected on each receipt had a fair market value of less than $250, he did not need to have any of the items appraised. Mr. Bass “misapprehends the applicable law.”
For purposes of determining the $5,000 threshold, property, and all “similar items of property” donated to one or more charitable organizations is treated as one property (§ 1.170A-13(c)(1)(i)). The phrase “similar items of property” is defined as “property of the same generic category or type, such as lithographs, paintings, photographs, books, clothing, jewelry, furniture, electronic equipment, household appliances, toys, and everyday kitchenware (§ 1.170A-13(c)(7)(iii)).