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THEY MUST HAVE BEEN THE NICEST CLOTHES EVER GIVEN TO THE SALVATION ARMY
November 01, 2007
A lot of taxpayers consider the charitable deduction for non-cash gifts sort of a freebie. It's not uncommon for tax returns that have no other charitable deductions to include a few hundred dollars for clothing gifts to Salvation Army or Goodwill.
But not $17,889.
Wisconsinites Festus and Paulene Obiakor filed a joint 2003 return claiming the following charitable gifts for clothes:
Unfortunately for the Obiakors, the tax law requires a "qualified appraisal" when non-cash donations go over $5,000. Similar items, like clothes, are aggregated in determing whether you reach the $5,000. Such donations are to be reported on Form 8283. As a result, the Tax Court yesterday disallowed all of the deductions, and the Obiakors will have to pay $4,283 more tax.
The Moral? If you donate used clothing, be sure to get an itemized receipt from the charity. And don't go over $5,000; unless you have a wardrobe like Jackie Onassis, the appraisal will cost you more than the deduction is worth.
Cite: Obiakor, T.C. Summary Opinion 2007-185
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Comments
My logic alarm went off when I noticed that they had old clothes to the tune of $5601, but also lived in a home that previously had 20 old appliances with a combined value of $300. Were they storing these clothes in the broken down Ford Thunderbird on blocks in the front yard?
Posted by: KL Snow | November 1, 2007 10:17 AM
Maybe in the 30 backpacks?
Posted by: Joe Kristan | November 1, 2007 1:06 PM