For an item that you originally purchased, and later donated used, your cost basis is what you originally paid for it. You are supposed to have documentation of your donation that includes an itemized inventory with sufficient detail to be able to determine both the original purchase date and cost as well as the fair market value when it was donated. If you do not have this information, you can estimate, but you should be aware that in the small chance that you are audited, the deduction may be disallowed if you can’t prove your original cost.
As a practical matter, the deduction will be allowed in TurboTax as long as the cost basis is higher than the donation value.
However, this means that in most cases, if you donated something that increased in value, the value of your deduction is limited to the price you originally paid. For example, if you donated 100 rare comic books with a value of $20 each, but you originally only paid $1 each, your maximum deduction value is $100, not $2000.
Most of the time when you are donating used clothing and used household items, this is not a problem because the donation value is much less than the original cost.
For items that you received as gifts, the cost basis is the price that the original giver paid. For items that you inherited, your cost basis is the fair market value on the date the previous owner died.
