Friday, May 18, 2012

When Non-Cash Gifts Are Worth Cash

When you give a friend money as a birthday gift it's appreciated, but there's always the thought that you could have been a little more creative. That's not really the case with nonprofits; money is one of the best gifts you can give.

But that doesn't mean it's the only gift.

Non-cash gifts, such as computer equipment or office supplies, can be very useful for nonprofits. Yet even though these items are not money, they still have cash value in the eyes of the Internal Revenue Service (IRS). IF that value is great enough, an organization might be required to substantiate the gift to the IRS.

In their book “Conducting a Successful Major Gifts and Planned Giving Program,” Kent E. Dove, Alan M. Spears, and Thomas W. Herbert explained that the need to file federal form 8283 also depends on the status of the taxpayer. They explained four instances that qualify, as well as which part of the form must be completed:

  • Non-cash gifts valued at $500 or less. The donor only has to complete federal Form 8283 for this type of gift if the person has made a series of gifts in a given year, each of which is valued at $500 or less but with a total value exceeding $500;
  • Non-cash gifts valued between $501 and $5,000. Gifts in this range must be reported on Part A of IRS Form 8283, which is then attached to the donor’s federal income tax return;
  • Non-cash gifts valued at more than $5,000. If the amount claimed as a charitable income tax deduction is in excess of this amount, the IRS requires the donor to complete Part B of Form 8283; and,
  • Gifts of non-publicly traded stock. If the donor makes this type of gift, Part B of Form 8283 must be completed. This is true regardless of the value of the stock. A qualified appraisal is required if the value of the stock exceeds $10,000.
So remember: Just because your organization is getting a donation of something other than cash doesn't mean that there is no accounting work to be done.

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