If you donate or receive noncash property, there are additional filing requirements by the IRS, specifically Forms 8283 and 8282. It’s important for both donors and donees to be aware of these forms because there are penalties if a form isn’t filed or is filed incorrectly.
Form 8283, Noncash Charitable Contributions
This form is filed by individuals, partnerships, and corporations claiming a charitable deduction on their income tax returns for noncash contributions, other than cash and publicly traded securities in excess of $500 for individuals and partnerships and $5,000 for corporations.
The form is filed with the individual, partnership, or corporation’s income tax return the year the contribution is made and the deduction is taken. If no charitable deduction is taken for the contribution, form 8283 isn’t required to be filed.
Section A and B
Section A of Form 8283 is used to report noncash contributions of $5,000 or less and to report contributions of publicly traded securities regardless of the amount.
Section B of Form 8283 is for noncash contributions exceeding $5,000.
The process for filing Form 8283, Section B, is more involved. It must be filed by the donor for each donee organization. The organization receiving the property must acknowledge receipt and confirm it’s a qualified organization under the Internal Revenue Code by completing and signing Part IV of Section B.
In addition, the organization must affirm that in the event it sells, exchanges, or disposes of the donated property within three years after the date of receipt, it will file Form 8282, Donee Information Return, with the IRS and provide the donor with a copy. If the organization expects to use donated property for a purpose unrelated to the organization’s mission, the organization should check the Yes box in Part IV.
The person signing the form must be an official who’s authorized to sign the organization’s tax returns, or a person specifically designated to sign Form 8283. A copy of the signed form should be kept by the donee organization.
A written appraisal from a qualified appraiser is required for noncash contributions unless the property is:
- Nonpublicly traded stock of $10,000 or less
- A vehicle (including a car, boat, or airplane) if the deduction for the vehicle is limited to the gross proceeds from its sale
- Intellectual property
- Certain securities considered to have market quotations readily available
- Inventory and other property donated by a corporation that are “qualified contributions” for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A)
- Stock in trade, inventory, or property held primarily for sale to customers
The appraisal must be made not earlier than 60 days before the contribution date. Then the written appraisal report must be received before the due date of the applicable income tax return. The appraisal doesn’t need to be attached to the donor’s income tax return except for contributions of art valued at $20,000 or more, clothing and household items not in good used condition, easements on buildings in historic districts, and contributions of more than $500,000.
Failure to complete or filing an incomplete form 8283 will lead to the charitable contribution deduction being disallowed on the donor’s income tax return.
Form 8282, Donee Information Return
This form is filed by the donee organization if it sells, exchanges, or disposes of donated property within three years of receipt. This includes donated property in excess of $5,000 for which the donee organization was required to sign Form 8283.
Exceptions to filing form 8282 include:
- Cash or publicly traded stock
- Items valued at $500 or less, all shares of nonpublicly traded stock, or items that form a set, which are considered one item
- Items consumed or distributed for charitable purposes without consideration
Form 8282 must be filed within 125 days after the date of disposition. If an organization doesn’t file because it had no reason to believe the substantiation requirements applied to the donor but later becomes aware that the substantiation requirements did apply, then the organization must file Form 8282 within 60 days after the date it becomes aware it was liable.
If the organization doesn’t have all the information required to complete the form, it should at a minimum fill in these sections:
- Name, address, and employer identification number (EIN)
- Part III, columns 1, 2, 3, and 4
- Part IV
If the donee organization transfers the property to another charitable organization within the three-year period, the donee organization must provide the successor donee organization with the following:
- Name, address, and EIN of the organization
- Copy of Section B of Form 8283 received from the donor or preceding donee (the preceding donee is defined as the organization or person who gave the donated property to the organization)
- Copy of Form 8282 within 15 days after the organization files it with the IRS
The successor donee organization to whom property was transferred is required to provide its name, address, and EIN to the donee organization within 15 days of the date the organization transferred the property or the date the successor donee received a copy of Section B Form 8283—whichever is later.
The donee organization is required to give a copy of Form 8282 to the original donor of the property and keep a copy of Section B of Form 8283 in its records.
A failure to file penalty of generally $50 per form can be assessed if the organization fails to file the form by its due date, fails to include all required information, or includes incorrect information on the form.
The organization could be assessed a $10,000 penalty for fraudulent identification of exempt-use property if it fraudulently states in Part III of Form 8282 that the property donated to the organization was sold, disposed of, exchanged, or knowingly misstates the property’s purpose.
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It’s important for donors to be aware of filing requirements related to the donation of certain noncash properties. It isn’t worth risking a charitable deduction being denied by the IRS. Organizations should consider adopting policies if they aren’t already in place to assist with the disclosure and recordkeeping requirements of Forms 8283 and 8282. To understand your organization’s requirements or if you have questions, please contact your Moss Adams professional.