I strongly urge everyone not to put up with the attitude of
many IRS compliance employees who insist a fifty gallon
trash bag of clothes is worth only "rag" value, or $25. As
long as the document requirements are met, as found in the
Regs, (as promulgated under the Code), the taxpayer's
testimony as to what was donated, especially if accompanied
by an itemized list, should be sufficient so long as it is
reasonable.

Among the foundations for my arguments was that $25 per bag
was just as unreasonable as $500 per bag.

I recently handled a group of audits where only $25 per bag
was being allowed for taxpayers with six figure incomes.
Essentially the Service asserted the taxpayers were dressing
their children in rags. When I went to appeals I even
brought in some credit card statements from upscale clothing
stores showing the taxpayers' annual outlays. My request for
$100 per bag was honored without hesitation in an immediate
settlement. I am sure the qualified offer I sent with the
appeal did not hurt, either.

Tim>
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Salvation Army used to have a web site with lists of items and
price ranges. My office has a copy which we Xerox and hand
out to clients. Another possibility is to locate a couple of
thrift stores in your area, take your list in and get a range
of prices. THEN BRING YOUR GUESSES DOWN BY ABOUT 20%.

(That's just experience. My clients persistantly use the
value of a Guentenberg Bible for the bag of dusty of
paperbacks they donate!).

Nan, EA in LA

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complexcomm[at]aol.com wrote:

- quote -

Charities are not responsible for valuation of any donation.
I seriously doubt that you interpreted what you read
correctly.

An itemized list is ALWAYS a good thing. It's even
acceptable to give the items while providing your own list
and have the charity mark your list as items received.
[Getting a client to do that can be nerveracking!]

- quote -

You should have had your list marked "received" by the
charity. Regardless, attach it to the receipt you did get,
and perhaps if you get audited, that will pass (but no
promises).

- quote -

But it is easy for them to indicate on your pre-prepared
list that the items listed thereon were received.

As an example, the Salvation Army in my area has a rubber
stamp where they do this, and then the receiving employee
signs his name on the signature line that's part of the
stamp imprint.

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complexcomm[at]aol.com wrote:

- quote -

I've seen multiple references to the passing of the "Tax
Relief Act of 2005" expected to pass in February 06 and
retro'd to Jan 06.

This section addresses your question;

"Charitable deductions of clothing and household items are
deductible at the lesser of cost basis or fair market value.
Because clothing and household items typically decline in
value, the charitable deduction is usually fair market
value.

Since it is difficult to value clothing and household items,
and the value depends greatly on their condition, there is
substantial potential for abuse. Therefore, TRA 2005
requires the IRS to publish a list of clothing and household
items and to assign a standard value to each item.
Deductions will be limited to the assigned value. However,
deductions may also be reduced. If the items of clothing or
other goods are not in good used condition, the deduction
will be limited to 20% of the IRS specified value.

There is one exception to the assigned value rule. If the
charity tracks the sale of the item and reports the sale
price to the donor, the donor will be permitted to take the
sale price as a charitable deduction.

Household items include furniture, electronics, appliances,
linens and similar items. Clothing can include the full
range of apparel. Given the low value and the number of
items handled by typical thrift shops, it seems unlikely
that the charity will be willing to report sale values to
donors. With the modest value involved, it seems probable
that donors will choose to use the IRS specified deduction
values. This specified value system does have the advantage
of simplicity for both the donor and the thrift shop or
other charity."

It doesn't reference the $500 limit for donated items, so
I'd suspect that provision has been abandoned. I agree it
will be tough to get each charity to go through your stuff
and create the proper receipt, but it seems the current
system invites too much fraud.

JOE

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I've read that it has been proposed that deductions for
donations of clothing and household items be allowed only
when the taxpayer receives a price list and an itemized
receipt from the charity.

Does anyone know the status of this proposed requirement and
what the chances are that it will become effective for
tax-year 2006?

I donated several bags of clothing today and received only a
receipt that says "3 bags of clothing." (I have an itemized
list of the items donated in my own records.) I have a lot
to donate this month since I am moving, and am concerned
about being able to take the full deduction for these items
if this new requirement goes into effect.

As a practical matter, I know that the organization I donate
to does not have the staff to prepare and give out price
lists and itemized receipts.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >