Tax Rules for Gifts of Personal Property

This article is the second of a two-part series on substantiating noncash gifts. Part one is on noncash real property.

Q: What are the tax rules for gifts of public property, and how can churches ensure compliance while assisting donors with proper documentation?

The tax rules for noncash donations, including gifts of public property, can be more complex than those for cash contributions. Noncash property encompasses a wide range of items, from clothing and furniture to vehicles, artwork, and publicly traded stock. Understanding these rules is essential for churches to guide donors and comply with IRS regulations.

Public property donations often refer to items of tangible value, such as vehicles, boats, airplanes, artwork, or other assets that may require special tax reporting. For instance, donating a vehicle requires filing Form 1098-C, while large gifts of property exceeding $5,000 require appraisals and additional IRS forms.

For gifts below $250, there is no specific requirement for a receipt from the church or charity. However, providing a written acknowledgment is encouraged, as it strengthens donor relationships. This acknowledgment should include a description of the donated item but not its value, as the donor is responsible for determining the fair market value.

Gifts in this tier require a written acknowledgment from the charity. The acknowledgment must include:

If a donor makes multiple contributions of $250 or more, they must receive either individual acknowledgments for each gift or a summary acknowledgment listing all contributions.

Donors whose gifts exceed $500 but fall under $5,000 must file Section A of Form 8283 with their tax returns. Along with the form, donors must maintain written records that include:

Churches should assist donors by providing clear instructions and ensuring receipts meet IRS requirements.

For noncash gifts exceeding $5,000, donors must complete Section B of Form 8283 and obtain a qualified appraisal. The appraisal must meet IRS standards and be performed by a certified appraiser. The church’s representative must also sign Form 8283 to acknowledge receipt of the gift but is not responsible for agreeing to the valuation.

Rare gifts valued over $500,000 require Form 8283 and the full appraisal to be attached to the donor’s tax return. This also applies to art valued at $20,000 or more and other specialized property types. Churches should encourage donors to work with tax professionals to ensure compliance with these complex rules.

If a church sells, exchanges, or disposes of donated property valued at more than $500 within three years of receipt, it must file Form 8282 with the IRS. This form must be submitted within 125 days of the disposal. Note that vehicles, boats, and airplanes have unique reporting requirements.

Public property donations often include vehicles, boats, airplanes, artwork, and other tangible assets with significant value.

Donors must complete Section B of Form 8283 and obtain a qualified appraisal for donations over $5,000.

If the church disposes of donated property valued over $500 within three years, it must file Form 8282 within 125 days of the disposal.

Yes, churches can guide donors by providing clear instructions, signing required forms, and encouraging them to seek professional advice.

For more detailed guidance, refer to IRS Publication 526 and IRS Publication 561.