Likewise, donors tend to make contributions at the end of the calendar year. Before making contributions to your favorite charities, it is a good idea to review the basic tax rules for charitable contribution deductions. Qualified charitable entities are noted in IRS Publication 78, Cumulative List of Organizations. A donation of appreciated property provides a current deduction for the FMV of the gift, while avoiding capital gains taxes that would have been paid if the property had been sold. In this situation, the property should be sold, with the proceeds donated to charity.
Special rules apply to contributions of appreciated art or other collectibles.
A FMV deduction is allowed, however, if the art is used for the museum's exempt purpose. An itemized deduction is usually available for the FMV of clothes and household goods donated to charity. Obtain a receipt from the charity listing the items donated. There is no formula for computing the FMV of clothes or household goods, but the charity may provide guidelines for you to consider. Document the vehicle's FMV, considering its condition.