When it comes to charitable contributions, noncash donations can be a great way to save on taxes—if done correctly. However, failing to comply with IRS rules can lead to costly consequences, as demonstrated in a recent Tax Court case (Cade, TC Memo. 2025-20).
The Case Overview
A couple filed an amended tax return (Form 1040-X) claiming a charitable deduction totaling $284,553 for noncash donations, including:
- Jackets and coveralls: $146,043
- Granite cobblestones: $89,100
- Vinyl tiles: $49,410
They submitted the required Form 8283 with appraiser declarations, but the Tax Court disallowed the deduction due to noncompliance with strict IRS rules for qualified appraisals.
Requirements for Noncash Donation Deductions
To ensure your noncash charitable donation deductions are valid, you must:
- Obtain a qualified appraisal for items valued over $5,000.
- The appraisal must meet IRS standards and be completed by a qualified appraiser.
- Attach Form 8283 to your tax return, properly completed with all required signatures and declarations.
- Retain documentation of your donation, including receipts from the charitable organization.
In this case, the couple failed to provide appraisals from qualified appraisers. This deficiency caused their entire deduction to be disallowed by the court.
Key Takeaways
- Qualified Appraisal: If the total value of noncash donations exceeds $5,000, ensure you get a qualified appraisal.
- Qualified Appraiser: The appraiser must meet the IRS’s definitions and provide a signed appraisal report.
- Accuracy Matters: Small errors in documentation can cost you your entire deduction. Always double-check compliance with IRS requirements.
Why This Matters
Charitable giving is a win-win for taxpayers and recipients, but the IRS has strict rules to prevent inflated deductions. Always work with experienced tax professionals to ensure your write-offs stand up to scrutiny.
By understanding and complying with these rules, you can avoid unnecessary tax penalties and maximize your deductions safely.
For more information, see IRS Publication 561: Determining the Value of Donated Property. For personalized advice, contact our firm today!
