Deductions & credits

You are correct. As our tax expert @LoganathanB indicated, you must determine fair market value (FMV) to figure out your allowed donation. The amount of the donation depends on whether it was held short term or long term and whether it has increased or decreased in value (See IRS Publication 526).

Giving Property That Has Increased in Value

If you contribute property with a fair market value that is more than your cost basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Your basis in property is generally what you paid for it. If you need more information about basis, see IRS Publication 551.

Different rules apply to figuring your deduction, depending on whether the property is:

• Ordinary income property, or (held one year or less)

• Capital gain property (held more than one year)

Giving Property That Has Decreased in Value

If you contribute property with a fair market value that is less than your basis in it, your deduction is limited to its fair market value. You can't claim a deduction for the difference between the property's basis and its fair market value.  Your basis in property is generally what you paid for it. 

• Received as a gift or inheritance;

• Used in a trade, business, or activity conducted for profit; or

• Claimed a casualty loss deduction for.

How do I enter my donations in TurboTax?

• The Form 8283 is completed automatically by TurboTax if the combined value of all the property you donate is more than $500.  

  All you have to do is enter all of your charitable contributions and this form will be included in your tax return, if required.