How do I calculate the cost adjusted basis in donated property (like clothes, household items)? Can I just multiply my donation amount by a certain amount?

[jaellah-thalberg]

If I assume my donation value is 30% of the original would that be a fair gauge of the cost or adjusted basis of the donated property?

[ThomasM125]

You would divide the donated value by .3 in this scenario and that would give you the cost basis.

[Edited 2/26/21 at 12:07 PM PST]

@jaellah-thalberg

[jaellah-thalberg]

My understanding the cost or adjusted basis is asking what the original value of the item or donation was.  I've already entered everything in ItsDeductible and entered the items individually.  This is a separate question I am getting when I do my federal wrap up.  I have the itemized deduction amount and now need to enter a separate cost or adjusted basis for the donation since it was over $500. 

[PattiF]

The basis is not that important to the calculation. The charitable deduction is based on the FMV which is often the thrift store value. If you have the value of the items entered through ItsDeductible, that is the most important part of the deduction.

[jaellah-thalberg]

Turbotax is requiring me to enter a value in this line so I am trying to figure out what number goes in there since it doesn't sound like its the same number of my donation valuation. 

[Opus 17]

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.

[JoannaB2]

It depends. If you donated personal and household items, adjusted basis of donated item/s is the FMV at the time it was donated, usually a thrift store value.  The non-cash donations over $500 must be itemized on form 8283  while donation of more than $2,500 need an appraisal from a licensed appraiser company..

[islandgirls97]

Same problem. I have to enter a value in here to move forward. I used It's Deductible, so how do I calculate the cost basis? Help??

[LeonardS]

No, you can not just multiply your donation by a certain amount to calculate your basis in the donated items. The cost basis for donated clothing, one of the most common types of donations, is based on clothing in good used condition or better, as per the IRS. The same valuation method is used for household items.

@islandgirls97

[Opus 17]

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@islandgirls97 wrote:

Same problem. I have to enter a value in here to move forward. I used It's Deductible, so how do I calculate the cost basis? Help??

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Cost basis is what you originally paid, or what the giver paid if the items were a gift.

When you donate items, you are supposed to have your own detailed inventory giving the item description, the date you acquired the item, how you acquired it (purchase, gift, inherited, etc.), your cost basis, the fair market value of the donated item, and its condition (good, fair, poor).  If you are donating items you have had for a while, you can make the best estimate of cost that you can, but be aware that if audited, the IRS does not have to award any deduction you can't prove.

[ebarnes_12]

Thus far the answers are so not helpful. The specific question is on the "Noncash Contributions Worksheet" Part IV, line 10 where it is asking "Cost or adjusted basis in the donated property". Should the answer be either "Cost" or "Adjusted"? Really does not make it clear what should be entered here. Either how the donation was valued or the number/estimate of the donation, which does not make much sense given you have a claimed amount as the deduction, usually based on FMV.

Any clarification based on this information?

[AmyC]

Your cost basis is required and varies based on how you got the object

• - the amount you paid when purchased.
• -value when inherited
• -amount paid by giftor

Donations can be valued several ways. See how here.

For full details see  About Publication 526, Charitable Contributions

[Jdr138]

While true, it is extremely unlikely one would be audited due to a donation of a small amount of household goods. 

The cost basis is simple: what did you pay for the item? If you paid $100 for a shirt last month and donated it, unworn, to the local thrift store who will sell it for $50, the cost basis is $100 and the thrift store value will be $50. You donated $50 worth of goods. 

If the donated item was a gift from your mom, what did mom pay for it? 

The only time it gets tricky is with vehicles, fine arts, collectibles, instruments, jewelry and coins.