Are trading card donations deductible? If so, how much?

[Carl]

Did you donate them to a qualified 501(c)3 registered organization? If not, they're not deductible. If you did, then you would need a qualified appraisal to claim them so you can 1) Prove you owned them, and 2) Prove their value. Also, if the total of all your donations and deductions does not exceed 7% of your AGI, claiming them will have no effect on your tax liability.

[SweetieJean]

@Carl
Where are you getting 7%?

[Opus 17 · Accepted solution]

First, you can take a tax deduction for any donations to a tax exempt organization; mostly 501(c)(3), but some others.  It must be listed here. https://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check

Second, in most cases, the value of the deduction is limited to what you paid for the cards, or what they are worth now, whichever is less.  If you received them as an inheritance, the deduction value is the value on the date of death of the previous owner, or their current value, whichever is less.  If you received them as a gift, the value of the deduction you can claim is the prices the original owner paid, or the current value, whichever is less.

However, if you donated them to an organization that will keep them and use them for the purpose of the charity, you can claim the current value even if the current value is more than you paid.  For example, donating baseball cards to a baseball museum, or donating game cards to a game museum.  

If the total claimed value is more than $5000, you need a qualified appraisal, and a form 8332 signed by the appraiser and by a financial official of the charity.

[Casimir1]

Are you saying if I bought a card for $1 20 years ago and today it is worth $500, the deduction is limited to $1 if I give it to a church, animal shelter, etc?  Why is it different than people who donate their business, land, boat, etc., none of which the charity will use in their operations, but will sell?

[Opus 17]

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@Casimir1 wrote:

Are you saying if I bought a card for $1 20 years ago and today it is worth $500, the deduction is limited to $1 if I give it to a church, animal shelter, etc?  Why is it different than people who donate their business, land, boat, etc., none of which the charity will use in their operations, but will sell?

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Correct.  The difference is how the law treats tangible personal property.  And the same rule applies to the boat, in your example. 

If you sold the card to a third party buyer, you would be required to report and pay capital gains tax on $499 of capital gains.  You could then donate some or all of the cash to the charity and take a deduction for the amount of cash donated.  But if you donate the item to a charity that will use the item for an unrelated purpose (a purpose unrelated to the type of item) then your maximum donation value is what you paid for the item, otherwise known as it's cost basis.  (Or, you can deduct the entire fair market value of $500 but only if you also report and pay tax on the $499 of capital gains.)  If you donate the item to a charity that will use the item for a related purpose, you can deduct the fair market value.

In practice, that means that if you buy a painting for $1000 and it is now worth $10,000 and you donate it to a church to sell for operating money, you can only deduct the $1000.  But if you donate it to a museum and they will keep it in their collection (using it for a related purpose) you can deduct the fair market value of $10,000.  

The same rule applies to the boat, except that it is even more restrictive.  You can't claim the fair market value of the boat, but only what the charity actually gets for it when they sell it, or your cost if your cost was less.  

The same rules apply to all tangible personal property -- items you can touch and hold and own.  It just doesn't come up very often because most used stuff is worth less than what you paid for it new.  

A business is intangible property, because the business (as separate from its inventory) is made up of good will and so on.  I have no idea what the rules are on donating a business.  If you donate inventory from a business, you don't get any tax deduction at all most of the time, because you already deducted the cost of inventory as business expense so your cost basis in the inventory is zero.

Land is not tangible personal property, it is "real property" (real estate=land and anything that is permanently attached) and the rules are different because that's how Congress decided.

See here https://www.irs.gov/forms-pubs/about-publication-526

[Hal_Al]

Q. Are you saying if I bought a card for $1 20 years ago and today it is worth $500, the deduction is limited to $1 if I give it to a church, animal shelter, etc? 

A. Yes.  Reference: https://www.cpajournal.com/2017/11/13/planning-tax-considerations-collectibles/#:~:text=Contribution....

Q. Why is it different than people who donate their business, land, boat, etc., none of which the charity will use in their operations, but will sell?

A.  It depends on the type of asset.  A boat (or more commonly a automobile) is treated the same as the baseball card. Land, or stock or mutual funds are capital assets and subject to favorable treatment (if long term). Reference: https://www.fidelitycharitable.org/guidance/charitable-tax-strategies/charitable-contributions.html

[tagteam]

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@Opus 17 wrote:
....If you donate inventory from a business, you don't get any tax deduction at all most of the time, because you already deducted the cost of inventory as business expense so your cost basis in the inventory is zero.....

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Taxpayers can generally deduct contributions of inventory if the merchandise is included in their opening inventory; it is then removed from the opening inventory and is not part of the cost of goods sold.

See https://www.irs.gov/publications/p526#en_US_2019_publink1000229740

[Carl]

Actually, it depends on how inventory is treated on the books. If the cost of the inventory is expensed, then it's already deducted and can't be deducted again as a donation. Whereas if inventory is tracked in the COGS section, then what "you" paid for that inventory (wholesale price I presume, not retail price) can be claimed as a charitable donation donation.

[mellish7777]

Actually what you wrote about COGS is wrong. The amount deductible for inventory contributions is the lower of its fair market value on the day you contributed it or its basis and that basis is what you paid for it that would have been included in your beginning inventory. If the cost of the donated inventory isn't included in your beginning inventory because you expensed it you can't claim a deduction....it's basis is zero.