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Jerry6
New Member

Why are there two prices in charitable donations?

I inherited clothes from my Mom.  If I enter a value of $2000 and enter a cost of $0, the donation is listed as $0.  If I change the cost to $2000 or higher, the donation becomes $2000.  I believe the value should be all that's needed.  How do these do figures impact the donation?  I nearly missed out on these!  I thought it was zero because my income was too high or some other limit on my donations.

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3 Replies
maglib
Level 10

Why are there two prices in charitable donations?

Your basis/cost should be the lower of cost or FMV on the date you received them. If you had said $0 cost and had recently gotten them, Normally items do not appreciate and IRS has a rule:

Rate of increase or decrease in value. 

Unless you can show that there were unusual circumstances, it is assumed that the increase or decrease in the value of your donated property from your cost has been at a reasonable rate. For time adjustments, an appraiser may consider published price indexes for information on general price trends, building costs, commodity costs, securities, and works of art sold at auction in arm's-length sales.

Hence why you should be careful in entering your cost basis.

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Jerry6
New Member

Why are there two prices in charitable donations?

I inherited them so my cost is $0.  Does that mean I don't get credit for the donation?
maglib
Level 10

Why are there two prices in charitable donations?

when you inherit items your cost basis is the FMV at time of death.  If it's gifted to you it is lower of donors cost or FMV at time of gift.  So if you recently got the items and donated them, your cost and the amount donated would be fairly close.
**I don't work for TT. Just trying to help. All the best.
***Say "Thanks" by marking as BEST ANSWER and clicking the thumb icon in a post and that I solved your question
**Mark the post that answers your question by clicking on "Mark as Best Answer"
I am NOT an expert and you should confirm with a tax expert.
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