Property Donated the Value of Determining

1 Userid: _____DTD TIP04 Leading adjust: 0% Draft Ok to PrintPAGER/ (17-Apr-2007)(Init. & date)Filename: D:\USERS\62pdb\documents\epicfiles\2006\ 1 of 15 of Publication 56113:14 - 17-APR-2007 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before 561 Contents(Rev. April 2007)Cat. No. Is Fair Market Value (FMV)?..2of theTreasuryDetermining Fair Market in Determining FairInternalMarket of Various Kinds ofthe Value and , Antiques, and OtherPropertyObjects of , Boats, and and in a , Interests for Life orTerms of Years, Remainders,and Life Insurance andAnnuity Interest in Property Notin of More Than $5, of More Than$500, Revenue Service Reviewof To Get Tax publication is designed to help donors andappraisers determine the Value of Property (other than cash)

2 That is given to qualified orga-nizations. It also explains what kind of informa-tion you must have to support the charitablecontribution deduction you claim on your publication does not discuss how tofigure the amount of your deduction for charita-ble contributions or written records and substan-tiation required. See Publication 526, CharitableContributions, for this and welcomeyour comments about this publication and yoursuggestions for future can write to us at the following address:Get forms and other informationInternal Revenue Servicefaster and easier by:Individual Forms and Publications BranchSE:W:CAR:MP:T:IInternet Constitution Ave.

3 NW, IR-6406 Washington, DC 20224 Page 2 of 15 of Publication 56113:14 - 17-APR-2007 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before respond to many letters by making and supporting the valu-Cost or Selling Price ofTherefore, it would be helpful if you would in-ation of Property , all factors affecting Value arethe Donated Propertyclude your daytime phone number, including therelevant and must be considered. These in-The cost of the Property to you or the actualarea code, in your :selling price received by the qualified organiza-You can email us at (The The cost or selling price of the item,tion may be the best indication of its FMV.)

4 How-asterisk must be included in the address.)ever, because conditions in the market change, Sales of comparable properties,Please put Publications Comment on the sub-the cost or selling price of Property may haveject line. Although we cannot respond individu- Replacement cost, andless weight if the Property was not bought or soldally to each email, we do appreciate your Opinions of and will consider your comments asreasonably close to the date of revise our tax cost or selling price is a good indicationThese factors are discussed later.

5 Also, seeof the Property s Value if:Ordering forms and 1 for a summary of questions to ask to download forms and The purchase or sale took place close toyou consider each , call 1-800-829-3676, or write to thethe valuation date in an open market,address below and receive a response within 10 Date of , the date of a The purchase or sale was atbusiness days after your request is is the date that the transfer of the arm s-length, Property takes place. The buyer and seller knew all relevantNational Distribution you deliver, without any conditions,facts, Box 8903a properly endorsed stock certificate to a quali-Bloomington, IL 61702 8903 The buyer and seller did not have to act,fied organization or to an agent of the organiza-andtion, the date of the contribution is the date ofdelivery.

6 If the certificate is mailed and receivedTax you have a tax question, The market did not change between thethrough the regular mail, it is the date of or call 1-800-829-1040. Wedate of purchase or sale and the valuationIf you deliver the certificate to a bank or brokercannot answer tax questions sent to either of as your agent or to the issuing corporationabove its agent, for transfer into the name of Morgan, who is not a dealerorganization, the date of the contribution is theUseful Itemsin gems, bought an assortment of gems fordate the stock is transferred on the books of theYou may want to see:corporation.

7 $5,000 from a promoter. The promoter claimedthat the price was wholesale even though you grant an option to a qualifiedand other dealers made similar sales at similarorganization to buy real Property , you have not 526 Charitable Contributionsprices to other persons who were not a charitable contribution until the organi-The promoter said that if Tom kept the gems forzation exercises the option. The amount of theForm (and Instructions) more than 1 year and then gave them to charity,contribution is the FMV of the Property on theTom could claim a charitable deduction of 8282 Donee Information Returndate the option is exercised minus the exercise$15,000, which, according to the promoter,price.

8 8283 Noncash Charitable Contributionswould be the Value of the gems at the time ofcontribution. Tom gave the gems to a qualified 8283-VPayment Voucher for Filing grant an option to a localcharity 13 months after buying Section 170(f)(13)university, which is a qualified organization, toSee How To Get Tax Help, near the end ofThe selling price for these gems had notbuy real Property . Under the option, the univer-this publication, for information about gettingchanged from the date of purchase to the datesity could buy the Property at any time during athese publications and Donated them to charity.

9 The best evidence2-year period for $40,000. The FMV of the prop-of FMV depends on actual transactions and noterty on the date the option is granted is $50, some artificial estimate. The $5,000 chargedIn the following tax year, the university exer-Tom and others is, therefore, the best evidencecises the option. The FMV of the Property on theof the maximum FMV of the the option is exercised is $55,000. There-What Is Fairfore, you have made a charitable contribution ofMarket Value (FMV)?$15,000 ($55,000, the FMV, minus $40,000, theTerms of the purchase or terms ofexercise price) in the tax year the option is exer-the purchase or sale should be considered inTo figure how much you may deduct for FMV if they influenced the you contribute, you must first determine itsThese terms include any restrictions, under-fair market Value on the date of the , or covenants limiting the use or dis-Determiningposition of the market market Value (FMV)

10 IsFair Market Valuethe price that Property would sell for on the openRate of increase or decrease in the Value of Donated propertymarket. It is the price that would be agreed onless you can show that there were unusual cir-would be a simple matter if you could rely onlybetween a willing buyer and a willing seller, withcumstances, it is assumed that the increase oron fixed formulas, rules, or methods. Usually it isneither being required to act, and both havingdecrease in the Value of your Donated propertynot that simple.