This article was last edited on Jul. 17, 2013.
So you finally creek open that basement door that’s been hiding your lost treasures. You know that wonderful pair of pants you were dying to have, but haven’t found the right occasion to wear them. Or the very strange shirt your wife bought you that came with the attached tie. No matter what’s hiding behind that door you most likely want to get rid of it. I’m sure you’re thinking yard sale. Just throw everything on the lawn and rake in the cash, but what if there’s a better option.
Yard sales require a lot of preparation. You have to advertise your sale, organize all your items, price and label them, and then whatever is left over you have to pack it all up and decide what to do with it. And let’s face it; no one really wants to buy that strange tie shirt combo.
Save yourself the trouble and donate these things to a local charity. Not only will you be helping someone, but you’ll also be able to deduct the fair market value of gently used or new items on your taxes. Sometimes the deduction will get your more money than yard sale hagglers would be willing to pay for your beloved items.
There are four factors that affect fair market value, below is a chart to guide you in determining how much your item is worth. Further details on these factors and other determinants of fair market value can be viewed in the IRS Publication 561.
IF the factor you are considering is…
THEN you should ask these questions…
Cost or Selling Price
|· Was the purchase or sale of the property reasonably close to the date of contribution?|
· Was any increase or decrease in value, as compared to your cost, at a reasonable rate?
· Do the terms of purchase or sale limit what can be done with the property?
· Was there an arm’s length offer to buy the property close to the valuation date?
Sales of Comparable Properties
|· How similar is the property sold to the property donated?|
· How close is the sale date to the valuation date?
· Was the sale at arm’s length?
· What was the condition of the market at the time sale?
|· What would it cost to replace the donated property?|
· Is there a reasonable relationship between replacement cost and FMV?
· Is the supply of the donated property more or less than the demand for it?
Opinions of Experts
|· Is the expert knowledgeable and competent?|
· Is the opinion thorough and supported by facts and experience?