Duncan Bass worked hard. He worked one full-time job for about 53 hours a week and a second job for about 15 hours a week. In addition to his W-2 jobs, Mr. Bass operated a landscaping, janitorial, and used clothing store business.<\/p>\n\n\n\n
His landscaping and janitorial clients gave Mr. Bass men\u2019s, women\u2019s, and children\u2019s clothing. He donated the better clothing to Goodwill and the Salvation Army, claiming clothing tax deductions of $13,852 and $11,594 for the two years before the court.<\/p>\n\n\n\n
What Mr. Bass Thought<\/strong><\/p>\n\n\n\n Mr. Bass testified before the court that he visited Goodwill and the Salvation Army 173 times. He did this to ensure that every donation receipt he completed showed a market value below $250 so he wouldn\u2019t need appraisals.<\/p>\n\n\n\n That Was Wrong<\/strong><\/p>\n\n\n\n IRS Form 8283 and its instructions, along with tax code Section 170(f)(11)(F) and IRS Regulation Section 1.170A-13(c), mandate grouping similar items of property (such as clothing) for purposes of the $5,000 rule that requires appraisals.<\/p>\n\n\n\n How the Court Ruled<\/strong><\/p>\n\n\n\n The Court denied Mr. Bass’s request to deduct his Clothing Donations to Goodwill and the Salvation Army. The court ruled that since no appraisals were attached to his tax return, Mr. Bass could not deduct any of his donations.<\/p>\n\n\n\n Takeaways<\/strong><\/p>\n\n\n\n The tax code has many rules regarding charitable giving. Make sure you know those rules before giving.<\/p>\n\n\n\n In Mr. Bass\u2019s case, IRS Form 8283 clearly shows that gifts of similar items, such as clothing, must be grouped for purposes of the appraisal rules.<\/p>\n\n\n\n The tax code\u2019s appraisal requirement seems to eliminate extensive property donations to charitable organizations.<\/p>\n\n\n\n If you would like to discuss your business or personal tax planning<\/a>, tax preparation<\/a>, and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton, PA office<\/a> to discuss your situation. You can also schedule a consultation at Click Here<\/a>.<\/p>\n\n\n\n Copyright \u00a9 2024 Keystone Financial Solutions, Inc. All rights reserved. BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal, or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.<\/strong><\/p>\n\n\n\n About Bryan Haarlander, EA, CTRS<\/u><\/strong>:<\/p>\n\n\n\n Bryan Haarlander is an IRS-licensed Enrolled Agent and a Certified Tax Resolution Specialist who owns and operates a specialized tax services firm serving clients in the western suburbs of Philadelphia, PA. This includes the cities of Chester Springs, Coatesville, Collegeville, Devon, Downingtown, Exton, King of Prussia, Paoli, Philadelphia, Phoenixville, Pottstown, Radnor, Reading, Wayne, and West Chester. We also serve clients in Delaware, New Jersey, New York, and the United States.<\/p>\n\n\n\n