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Free Income Tax

Free income tax Publication 584 - Additional Material Table of Contents This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Entrance Hall This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Living Room This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Dining Room This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Kitchen This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Den This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Bedrooms This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Bathrooms This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Recreation Room This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Laundry and Basement This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Garage This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Sporting Equipment This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Men's Clothing This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Women's Clothing This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Children's Clothing This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Jewelry This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Electrical Appliances This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Linens This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Miscellaneous This image is too large to be displayed in the current screen. Free income tax Please click the link to view the image. Free income tax Motor Vehicles Schedule 20. Free income tax Home (Excluding Contents) Note. Free income tax If you used the entire property as your home, fill out only column (a). Free income tax If you used part of the property as your home and part of it for business or to produce rental income, you must allocate the entries on lines 2-9 between the personal part (column (a)) and the business/rental part (column (b)). Free income tax 1. Free income tax Description of property (Show location and date acquired. Free income tax )     (a)  Personal Part (b)  Business/Rental Part 2. Free income tax Cost or other (adjusted) basis of property (from Worksheet A)     3. Free income tax Insurance or other reimbursement Note. Free income tax If line 2 is more than line 3, skip line 4. Free income tax If line 3 is more than line 2, you exclude gain, and the gain is more than you can exclude, see the instructions for line 3 in the Instructions for Form 4684 for the amount to enter. Free income tax     4. Free income tax Gain from casualty. Free income tax If line 3 is more than line 2, enter the difference here and skip lines 5 through 9. Free income tax But see Next below line 9. Free income tax     5. Free income tax Fair market value before casualty     6. Free income tax Fair market value after casualty     7. Free income tax Decrease in fair market value. Free income tax Subtract line 6 from line 5. Free income tax     8. Free income tax Enter the smaller of line 2 or line 7 Note for business/rental part. Free income tax If the property was totally destroyed by casualty, enter on line 8, column (b) the amount from line 2, column (b). Free income tax     9. Free income tax Subtract line 3 from line 8. Free income tax If zero or less, enter -0-. Free income tax     Next: Transfer the entries from line 1 and lines 2-9, column (a), above to the corresponding lines on Form 4684, Section A. Free income tax Transfer the entries from line 1 and lines 2-9, column (b), to the corresponding lines on Form 4684, Section B. Free income tax Worksheet A. Free income tax Cost or Other (Adjusted) Basis Caution. Free income tax See the Worksheet A Instructions before you use this worksheet. Free income tax         (a) Personal Part (b) Business/Rental Part 1. Free income tax   Enter the purchase price of the home damaged or destroyed. Free income tax (If you filed Form 2119 when you originally acquired that home to postpone gain on the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119. Free income tax ) 1. Free income tax     2. Free income tax   Seller paid points for home bought after 1990. Free income tax Do not include any seller-paid points you already subtracted to arrive at the amount entered on line 1 2. Free income tax     3. Free income tax   Subtract line 2 from line 1 3. Free income tax     4. Free income tax   Settlement fees or closing costs. Free income tax (See Settlement costs in Publication 551. Free income tax ) If line 1 includes the adjusted basis of the new home from Form 2119, skip lines 4a-4g and 5; go to line 6. Free income tax         a. Free income tax Abstract and recording fees 4a. Free income tax       b. Free income tax Legal fees (including fees for title search and preparing documents) 4b. Free income tax       c. Free income tax Survey fees 4c. Free income tax       d. Free income tax Title insurance 4d. Free income tax       e. Free income tax Transfer or stamp taxes 4e. Free income tax       f. Free income tax Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions) 4f. Free income tax       g. Free income tax Other 4g. Free income tax     5. Free income tax   Add lines 4a through 4g 5. Free income tax     6. Free income tax   Cost of additions and improvements. Free income tax (See Increases to Basis in Publication 551. Free income tax ) Do not include any additions and improvements included on line 1 6. Free income tax     7. Free income tax   Special tax assessments paid for local improvements, such as streets and sidewalks 7. Free income tax     8. Free income tax   Other increases to basis 8. Free income tax     9. Free income tax   Add lines 3, 5, 6, 7, and 8 9. Free income tax     10. Free income tax   Depreciation allowed or allowable, related to the business use or rental of the home 10. Free income tax 0   11. Free income tax   Other decreases to basis (See Decreases to Basis in Publication 551. Free income tax ) 11. Free income tax     12. Free income tax   Add lines 10 and 11 12. Free income tax     13. Free income tax   Cost or other (adjusted) basis of home damaged or destroyed. Free income tax Subtract line 12 from line 9. Free income tax Enter here and on Schedule 20, line 2 13. Free income tax     Worksheet A Instructions. Free income tax If you use Worksheet A to figure the cost or other (adjusted) basis of your home, follow these instructions. Free income tax DO NOT use this worksheet to determine your basis if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939. Free income tax IF. Free income tax . Free income tax . Free income tax   THEN. Free income tax . Free income tax . Free income tax you inherited your home from a decedent who died either before or after 2010 or from a decedent who died in 2010 and whose executor did not file Form 8939. Free income tax 1 skip lines 1–4 of the worksheet. Free income tax 2 find your basis using the rules under Inherited Property in Publication 551. Free income tax Enter this amount on line 5 of the worksheet. Free income tax 3 fill out lines 6–13 of the worksheet. Free income tax you received your home as a gift 1 read Property Received as a Gift in Publication 551 and enter on lines 1 and 3 of the worksheet either the donor's adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate. Free income tax 2 if you can add any federal gift tax to your basis, enter that amount on line 5 of the worksheet. Free income tax 3 fill out the rest of the worksheet. Free income tax you received your home as a trade for other property 1 enter on line 1 of the worksheet the fair market value of the other property at the time of the trade. Free income tax (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Free income tax ) 2 fill out the rest of the worksheet. Free income tax you built your home 1 add the purchase price of the land and the cost of building the home. Free income tax Enter that total on line 1 of the worksheet. Free income tax (However, if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Free income tax ) 2 fill out the rest of the worksheet. Free income tax you received your home from your spouse after July 18, 1984 1 skip lines 1–4 of the worksheet. Free income tax 2 enter on line 5 of the worksheet your spouse's cost or other (adjusted) basis in the home just before you received it. Free income tax 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Free income tax you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18, 1984     fill out one worksheet, making adjustments to basis for events both before and after the transfer. Free income tax   you received your home from your spouse before July 19, 1984 1 skip lines 1–4 of the worksheet. Free income tax 2 enter on line 5 of the worksheet the home's fair market value at the time you received it. Free income tax 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Free income tax you owned a home jointly with your spouse, and your spouse transferred his or her interest in the home to you before July 19, 1984 1 fill out a worksheet, lines 1–13, making adjustments to basis only for events before the transfer. Free income tax 2 multiply the amount on line 13 of that worksheet by 50% (0. Free income tax 50) to get the adjusted basis of your half-interest at the time of the transfer. Free income tax 3 multiply the fair market value of the home at the time of the transfer by 50% (0. Free income tax 50). Free income tax Generally, this is the basis of the half-interest that your spouse owned. Free income tax 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Free income tax 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after the transfer. Free income tax you owned your home jointly with a nonspouse 1 fill out lines 1–13 of the worksheet. Free income tax 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest. Free income tax Worksheet A Instructions. Free income tax (Continued) IF. Free income tax . Free income tax . Free income tax   THEN. Free income tax . Free income tax . Free income tax you owned your home jointly with your spouse who died before 2010 and before the casualty 1 fill out a worksheet, lines 1–13, including adjustments to basis only for events before your spouse's death. Free income tax 2 multiply the amount on line 13 of that worksheet by 50% (0. Free income tax 50) to get the adjusted basis of your half-interest on the date of death. Free income tax 3 figure the basis for the half-interest owned by your spouse. Free income tax This is one-half of the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax). Free income tax (The basis in your half will remain one-half of the adjusted basis determined in step 2. Free income tax ) 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Free income tax 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after your spouse's death. Free income tax you owned your home jointly with your spouse who died before 2010 and before the casualty, and your permanent legal home is in a community property state 1 skip lines 1–4 of the worksheet. Free income tax 2 enter the amount of your basis on line 5 of the worksheet. Free income tax Generally, this is the fair market value of the home at the time of death. Free income tax (But see Community Property in Publication 551 for special rules. Free income tax ) 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after your spouse's death. Free income tax you owned your home jointly with a nonspouse who died before 2010 and before the casualty 1 fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the co-owner's death. Free income tax 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest on the date of death. Free income tax 3 multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by the co-owner's percentage of ownership. Free income tax This is the basis for the co-owner's part-interest. Free income tax 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Free income tax 5 complete lines 6–13 of the second worksheet, including adjustments to basis only for events after the co-owner's death. Free income tax your home was ever damaged as a result of a prior casualty 1 on line 8 of the worksheet, enter any amounts you spent to restore the home to its condition before the prior casualty. Free income tax 2 on line 11 enter: any insurance reimbursements you received (or expect to receive) for the prior loss,  and any deductible casualty losses from prior years not covered by insurance. Free income tax the person who sold you your home paid points on your loan and you bought your home after 1990 but before April 4, 1994. Free income tax   on line 2 enter the seller-paid points only if you deducted them as home mortgage interest in the year paid (unless you used the seller-paid points to reduce the amount on line 1). Free income tax the person who sold you your home paid points on your loan and you bought your home after April 3, 1994   on line 2 enter the seller-paid points even if you did not deduct them (unless you used the seller-paid points to reduce the amount on line 1). Free income tax you used part of the property as your home and part of it for business or to produce rental income   you must allocate the entries on Worksheet A between the personal part (column (a)) and the business/rental part (column (b)). Free income tax none of these items apply   fill out the entire worksheet. Free income tax Prev  Up  Next   Home   More Online Publications
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Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

City Street Address Days/Hours of Service Telephone*
Akron 2 S. Main St.
Akron, OH 44308

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(330) 253-7013
Canton 301 McKinley Ave. SW
Canton, OH 44702

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(330) 588-4417 
Cincinnati  550 Main St.
Cincinnati, OH 45202 

Monday-Friday 8:30 a.m.-4:30 p.m.
 

Services Provided

(513) 263-3333 
Cincinnati
(West Chester) 
9075 Centre Pointe Dr.
West Chester, OH 45069

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

  Services Provided

(513) 263-3333 
Cleveland  1240 E. Ninth St.
Cleveland, OH 44199 

Monday-Friday 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(216) 522-4048 
Columbus  200 N. High St.
Columbus, OH 43215 

Monday-Friday 8:30 a.m.-4:30 p.m. 

 

Services Provided

(614) 280-8691 
Dayton  200 W. Second St.
Dayton, OH 45402 

Monday-Friday 8:30 a.m.-4:30 p.m.
  

Services Provided

(937) 610-2182 
Lima  401 W. North St.
Lima, OH 45801 

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

 Services Provided

(419) 223-5873 
Mansfield  180 N. Diamond St.
Mansfield, OH 44902 

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(419) 522-9204 
Toledo  Four Seagate
433 N. Summit
Toledo, OH 43604

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:30 p.m. - 1:30 p.m.)

 

Services Provided

(419) 213-5165 
Youngstown  10 E. Commerce St. 
Youngstown, OH 44503 

Monday-Friday 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.)

 

Services Provided

(330) 746-0006 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

 

The Taxpayer Advocate Service: Call (513) 263-3260 in Cincinnati, (216) 522-7134 in Cleveland or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see Tax Topic 104

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Offices at:

Internal Revenue Service
1240 E. 9th St.
Room 403
Cleveland, OH 44199

Internal Revenue Service
550 Main St. Room 7024
Cincinnati, OH 45202

Internal Revenue Service
200 N. High St.
Room 425
Columbus, OH 43215

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

The Free Income Tax

Free income tax Publication 561 - Main Contents Table of Contents What Is Fair Market Value (FMV)?Factors. Free income tax Stock. Free income tax Options. Free income tax Determining Fair Market Value Problems in Determining Fair Market Value Valuation of Various Kinds of PropertyHousehold Goods Used Clothing Jewelry and Gems Paintings, Antiques, and Other Objects of Art Collections Cars, Boats, and Aircraft Inventory Patents Stocks and Bonds Real Estate Interest in a Business Annuities, Interests for Life or Terms of Years, Remainders, and Reversions Certain Life Insurance and Annuity Contracts Partial Interest in Property Not in Trust AppraisalsDeductions of More Than $5,000 Deductions of More Than $500,000 Qualified Appraisal Form 8283 Internal Revenue Service Review of Appraisals Penalty How To Get Tax HelpLow income tax clinics (LITCs). Free income tax What Is Fair Market Value (FMV)? To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution. Free income tax Fair market value. Free income tax   Fair market value (FMV) is the price that property would sell for on the open market. Free income tax It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. Free income tax If you put a restriction on the use of property you donate, the FMV must reflect that restriction. Free income tax Example 1. Free income tax If you give used clothing to the Salvation Army, the FMV would be the price that typical buyers actually pay for clothing of this age, condition, style, and use. Free income tax Usually, such items are worth far less than what you paid for them. Free income tax Example 2. Free income tax If you donate land and restrict its use to agricultural purposes, you must value the land at its value for agricultural purposes, even though it would have a higher FMV if it were not restricted. Free income tax Factors. Free income tax   In making and supporting the valuation of property, all factors affecting value are relevant and must be considered. Free income tax These include: The cost or selling price of the item, Sales of comparable properties, Replacement cost, and Opinions of experts. Free income tax   These factors are discussed later. Free income tax Also, see Table 1 for a summary of questions to ask as you consider each factor. Free income tax Date of contribution. Free income tax   Ordinarily, the date of a contribution is the date that the transfer of the property takes place. Free income tax Stock. Free income tax   If you deliver, without any conditions, a properly endorsed stock certificate to a qualified organization or to an agent of the organization, the date of the contribution is the date of delivery. Free income tax If the certificate is mailed and received through the regular mail, it is the date of mailing. Free income tax If you deliver the certificate to a bank or broker acting as your agent or to the issuing corporation or its agent, for transfer into the name of the organization, the date of the contribution is the date the stock is transferred on the books of the corporation. Free income tax Options. Free income tax   If you grant an option to a qualified organization to buy real property, you have not made a charitable contribution until the organization exercises the option. Free income tax The amount of the contribution is the FMV of the property on the date the option is exercised minus the exercise price. Free income tax Example. Free income tax You grant an option to a local university, which is a qualified organization, to buy real property. Free income tax Under the option, the university could buy the property at any time during a 2-year period for $40,000. Free income tax The FMV of the property on the date the option is granted is $50,000. Free income tax In the following tax year, the university exercises the option. Free income tax The FMV of the property on the date the option is exercised is $55,000. Free income tax Therefore, you have made a charitable contribution of $15,000 ($55,000, the FMV, minus $40,000, the exercise price) in the tax year the option is exercised. Free income tax Determining Fair Market Value Determining the value of donated property would be a simple matter if you could rely only on fixed formulas, rules, or methods. Free income tax Usually it is not that simple. Free income tax Using such formulas, etc. Free income tax , seldom results in an acceptable determination of FMV. Free income tax There is no single formula that always applies when determining the value of property. Free income tax This is not to say that a valuation is only guesswork. Free income tax You must consider all the facts and circumstances connected with the property, such as its desirability, use, and scarcity. Free income tax For example, donated furniture should not be evaluated at some fixed rate such as 15% of the cost of new replacement furniture. Free income tax When the furniture is contributed, it may be out of style or in poor condition, therefore having little or no market value. Free income tax On the other hand, it may be an antique, the value of which could not be determined by using any formula. Free income tax Cost or Selling Price of the Donated Property The cost of the property to you or the actual selling price received by the qualified organization may be the best indication of its FMV. Free income tax However, because conditions in the market change, the cost or selling price of property may have less weight if the property was not bought or sold reasonably close to the date of contribution. Free income tax The cost or selling price is a good indication of the property's value if: The purchase or sale took place close to the valuation date in an open market, The purchase or sale was at “arm's-length,” The buyer and seller knew all relevant facts, The buyer and seller did not have to act, and The market did not change between the date of purchase or sale and the valuation date. Free income tax Example. Free income tax Tom Morgan, who is not a dealer in gems, bought an assortment of gems for $5,000 from a promoter. Free income tax The promoter claimed that the price was “wholesale” even though he and other dealers made similar sales at similar prices to other persons who were not dealers. Free income tax The promoter said that if Tom kept the gems for more than 1 year and then gave them to charity, Tom could claim a charitable deduction of $15,000, which, according to the promoter, would be the value of the gems at the time of contribution. Free income tax Tom gave the gems to a qualified charity 13 months after buying them. Free income tax The selling price for these gems had not changed from the date of purchase to the date he donated them to charity. Free income tax The best evidence of FMV depends on actual transactions and not on some artificial estimate. Free income tax The $5,000 charged Tom and others is, therefore, the best evidence of the maximum FMV of the gems. Free income tax Terms of the purchase or sale. Free income tax   The terms of the purchase or sale should be considered in determining FMV if they influenced the price. Free income tax These terms include any restrictions, understandings, or covenants limiting the use or disposition of the property. Free income tax Rate of increase or decrease in value. Free income tax   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. Free income tax 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. Free income tax Example. Free income tax Bill Brown bought a painting for $10,000. Free income tax Thirteen months later he gave it to an art museum, claiming a charitable deduction of $15,000 on his tax return. Free income tax The appraisal of the painting should include information showing that there were unusual circumstances that justify a 50% increase in value for the 13 months Bill held the property. Free income tax Arm's-length offer. Free income tax   An arm's-length offer to buy the property close to the valuation date may help to prove its value if the person making the offer was willing and able to complete the transaction. Free income tax To rely on an offer, you should be able to show proof of the offer and the specific amount to be paid. Free income tax Offers to buy property other than the donated item will help to determine value if the other property is reasonably similar to the donated property. Free income tax Sales of Comparable Properties The sales prices of properties similar to the donated property are often important in determining the FMV. Free income tax The weight to be given to each sale depends on the following. Free income tax The degree of similarity between the property sold and the donated property. Free income tax The time of the sale—whether it was close to the valuation date. Free income tax The circumstances of the sale—whether it was at arm's-length with a knowledgeable buyer and seller, with neither having to act. Free income tax The conditions of the market in which the sale was made—whether unusually inflated or deflated. Free income tax The comparable sales method of valuing real estate is explained later under Valuation of Various Kinds of Property. Free income tax Example 1. Free income tax Mary Black, who is not a book dealer, paid a promoter $10,000 for 500 copies of a single edition of a modern translation of the Bible. Free income tax The promoter had claimed that the price was considerably less than the “retail” price, and gave her a statement that the books had a total retail value of $30,000. Free income tax The promoter advised her that if she kept the Bibles for more than 1 year and then gave them to a qualified organization, she could claim a charitable deduction for the “retail” price of $30,000. Free income tax Thirteen months later she gave all the Bibles to a church that she selected from a list provided by the promoter. Free income tax At the time of her donation, wholesale dealers were selling similar quantities of Bibles to the general public for $10,000. Free income tax The FMV of the Bibles is $10,000, the price at which similar quantities of Bibles were being sold to others at the time of the contribution. Free income tax Example 2. Free income tax The facts are the same as in Example 1, except that the promoter gave Mary Black a second option. Free income tax The promoter said that if Mary wanted a charitable deduction within 1 year of the purchase, she could buy the 500 Bibles at the “retail” price of $30,000, paying only $10,000 in cash and giving a promissory note for the remaining $20,000. Free income tax The principal and interest on the note would not be due for 12 years. Free income tax According to the promoter, Mary could then, within 1 year of the purchase, give the Bibles to a qualified organization and claim the full $30,000 retail price as a charitable contribution. Free income tax She purchased the Bibles under the second option and, 3 months later, gave them to a church, which will use the books for church purposes. Free income tax At the time of the gift, the promoter was selling similar lots of Bibles for either $10,000 or $30,000. Free income tax The difference between the two prices was solely at the discretion of the buyer. Free income tax The promoter was a willing seller for $10,000. Free income tax Therefore, the value of Mary's contribution of the Bibles is $10,000, the amount at which similar lots of Bibles could be purchased from the promoter by members of the general public. Free income tax Replacement Cost The cost of buying, building, or manufacturing property similar to the donated item should be considered in determining FMV. Free income tax However, there must be a reasonable relationship between the replacement cost and the FMV. Free income tax The replacement cost is the amount it would cost to replace the donated item on the valuation date. Free income tax Often there is no relationship between the replacement cost and the FMV. Free income tax If the supply of the donated property is more or less than the demand for it, the replacement cost becomes less important. Free income tax To determine the replacement cost of the donated property, find the “estimated replacement cost new. Free income tax ” Then subtract from this figure an amount for depreciation due to the physical condition and obsolescence of the donated property. Free income tax You should be able to show the relationship between the depreciated replacement cost and the FMV, as well as how you arrived at the “estimated replacement cost new. Free income tax ” Opinions of Experts Generally, the weight given to an expert's opinion on matters such as the authenticity of a coin or a work of art, or the most profitable and best use of a piece of real estate, depends on the knowledge and competence of the expert and the thoroughness with which the opinion is supported by experience and facts. Free income tax For an expert's opinion to deserve much weight, the facts must support the opinion. Free income tax For additional information, see Appraisals, later. Free income tax Table 1. Free income tax Factors That Affect FMV IF the factor you are considering is. Free income tax . Free income tax . Free income tax THEN you should ask these questions. Free income tax . Free income tax . Free income tax     cost or selling price Was the purchase or sale of the property reasonably close to the date of contribution? Was any increase or decrease in value, as compared to your cost, at a reasonable rate? Do the terms of purchase or sale limit what can be done with the property? Was there an arm's-length offer to buy the property close to the valuation date?     sales of comparable properties How similar is the property sold to the property donated? How close is the date of sale to the valuation date? Was the sale at arm's-length? What was the condition of the market at the time of sale?     replacement cost What would it cost to replace the donated property? Is there a reasonable relationship between replacement cost and FMV? Is the supply of the donated property more or less than the demand for it?     opinions of experts Is the expert knowledgeable and competent? Is the opinion thorough and supported by facts and experience? Problems in Determining Fair Market Value There are a number of problems in determining the FMV of donated property. Free income tax Unusual Market Conditions The sale price of the property itself in an arm's-length transaction in an open market is often the best evidence of its value. Free income tax When you rely on sales of comparable property, the sales must have been made in an open market. Free income tax If those sales were made in a market that was artificially supported or stimulated so as not to be truly representative, the prices at which the sales were made will not indicate the FMV. Free income tax For example, liquidation sale prices usually do not indicate the FMV. Free income tax Also, sales of stock under unusual circumstances, such as sales of small lots, forced sales, and sales in a restricted market, may not represent the FMV. Free income tax Selection of Comparable Sales Using sales of comparable property is an important method for determining the FMV of donated property. Free income tax However, the amount of weight given to a sale depends on the degree of similarity between the comparable and the donated properties. Free income tax The degree of similarity must be close enough so that this selling price would have been given consideration by reasonably well-informed buyers or sellers of the property. Free income tax Example. Free income tax You give a rare, old book to your former college. Free income tax The book is a third edition and is in poor condition because of a missing back cover. Free income tax You discover that there was a sale for $300, near the valuation date, of a first edition of the book that was in good condition. Free income tax Although the contents are the same, the books are not at all similar because of the different editions and their physical condition. Free income tax Little consideration would be given to the selling price of the $300 property by knowledgeable buyers or sellers. Free income tax Future Events You may not consider unexpected events happening after your donation of property in making the valuation. Free income tax You may consider only the facts known at the time of the gift, and those that could be reasonably expected at the time of the gift. Free income tax Example. Free income tax You give farmland to a qualified charity. Free income tax The transfer provides that your mother will have the right to all income and full use of the property for her life. Free income tax Even though your mother dies 1 week after the transfer, the value of the property on the date it is given is its present value, subject to the life interest as estimated from actuarial tables. Free income tax You may not take a higher deduction because the charity received full use and possession of the land only 1 week after the transfer. Free income tax Using Past Events to Predict the Future A common error is to rely too much on past events that do not fairly reflect the probable future earnings and FMV. Free income tax Example. Free income tax You give all your rights in a successful patent to your favorite charity. Free income tax Your records show that before the valuation date there were three stages in the patent's history of earnings. Free income tax First, there was rapid growth in earnings when the invention was introduced. Free income tax Then, there was a period of high earnings when the invention was being exploited. Free income tax Finally, there was a decline in earnings when competing inventions were introduced. Free income tax The entire history of earnings may be relevant in estimating the future earnings. Free income tax However, the appraiser must not rely too much on the stage of rapid growth in earnings, or of high earnings. Free income tax The market conditions at those times do not represent the condition of the market at the valuation date. Free income tax What is most significant is the trend of decline in earnings up to the valuation date. Free income tax For more information about donations of patents, see Patents, later. Free income tax Valuation of Various Kinds of Property This section contains information on determining the FMV of ordinary kinds of donated property. Free income tax For information on appraisals, see Appraisals, later. Free income tax Household Goods The FMV of used household goods, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Free income tax Such used property may have little or no market value because of its worn condition. Free income tax It may be out of style or no longer useful. Free income tax You cannot take a deduction for household goods donated after August 17, 2006, unless they are in good used condition or better. Free income tax A household good that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. Free income tax See Deduction over $500 for certain clothing or household items, later. Free income tax If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art. Free income tax Used Clothing Used clothing and other personal items are usually worth far less than the price you paid for them. Free income tax Valuation of items of clothing does not lend itself to fixed formulas or methods. Free income tax The price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops, is an indication of the value. Free income tax You cannot take a deduction for clothing donated after August 17, 2006, unless it is in good used condition or better. Free income tax An item of clothing that is not in good used condition or better for which you take a deduction of more than $500 requires a qualified appraisal. Free income tax See Deduction over $500 for certain clothing or household items, later. Free income tax For valuable furs or very expensive gowns, a Form 8283 may have to be sent with your tax return. Free income tax Jewelry and Gems Jewelry and gems are of such a specialized nature that it is almost always necessary to get an appraisal by a specialized jewelry appraiser. Free income tax The appraisal should describe, among other things, the style of the jewelry, the cut and setting of the gem, and whether it is now in fashion. Free income tax If not in fashion, the possibility of having the property redesigned, recut, or reset should be reported in the appraisal. Free income tax The stone's coloring, weight, cut, brilliance, and flaws should be reported and analyzed. Free income tax Sentimental personal value has no effect on FMV. Free income tax But if the jewelry was owned by a famous person, its value might increase. Free income tax Paintings, Antiques, and Other Objects of Art Your deduction for contributions of paintings, antiques, and other objects of art, should be supported by a written appraisal from a qualified and reputable source, unless the deduction is $5,000 or less. Free income tax Examples of information that should be included in appraisals of art objects—paintings in particular—are found later under Qualified Appraisal. Free income tax Art valued at $20,000 or more. Free income tax   If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the signed appraisal to your return. Free income tax For individual objects valued at $20,000 or more, a photograph of a size and quality fully showing the object, preferably an 8 x 10 inch color photograph or a color transparency no smaller than 4 x 5 inches, must be provided upon request. Free income tax Art valued at $50,000 or more. Free income tax   If you donate an item of art that has been appraised at $50,000 or more, you can request a Statement of Value for that item from the IRS. Free income tax You must request the statement before filing the tax return that reports the donation. Free income tax Your request must include the following. Free income tax A copy of a qualified appraisal of the item. Free income tax See Qualified Appraisal, later. Free income tax A $2,500 check or money order payable to the Internal Revenue Service for the user fee that applies to your request regarding one, two, or three items of art. Free income tax Add $250 for each item in excess of three. Free income tax A completed Form 8283, Section B. Free income tax The location of the IRS territory that has examination responsibility for your return. Free income tax If your request lacks essential information, you will be notified and given 30 days to provide the missing information. Free income tax   Send your request to: Internal Revenue Service Attention: Art Appraisal (C:AP:ART) P. Free income tax O. Free income tax Box 27720 McPherson Station Washington, DC 20038 Refunds. Free income tax   You can withdraw your request for a Statement of Value at any time before it is issued. Free income tax However, the IRS will not refund the user fee if you do. Free income tax   If the IRS declines to issue a Statement of Value in the interest of efficient tax administration, the IRS will refund the user fee. Free income tax Authenticity. Free income tax   The authenticity of the donated art must be determined by the appraiser. Free income tax Physical condition. Free income tax   Important items in the valuation of antiques and art are physical condition and extent of restoration. Free income tax These have a significant effect on the value and must be fully reported in an appraisal. Free income tax An antique in damaged condition, or lacking the “original brasses,” may be worth much less than a similar piece in excellent condition. Free income tax Art appraisers. Free income tax   More weight will usually be given to an appraisal prepared by an individual specializing in the kind and price range of the art being appraised. Free income tax Certain art dealers or appraisers specialize, for example, in old masters, modern art, bronze sculpture, etc. Free income tax Their opinions on the authenticity and desirability of such art would usually be given more weight than the opinions of more generalized art dealers or appraisers. Free income tax They can report more recent comparable sales to support their opinion. Free income tax   To identify and locate experts on unique, specialized items or collections, you may wish to use the current Official Museum Directory of the American Association of Museums. Free income tax It lists museums both by state and by category. Free income tax   To help you locate a qualified appraiser for your donation, you may wish to ask an art historian at a nearby college or the director or curator of a local museum. Free income tax The Yellow Pages often list specialized art and antique dealers, auctioneers, and art appraisers. Free income tax You may be able to find a qualified appraiser on the Internet. Free income tax You may also contact associations of dealers for guidance. Free income tax Collections Since many kinds of hobby collections may be the subject of a charitable donation, it is not possible to discuss all of the possible collectibles in this publication. Free income tax Most common are rare books, autographs, sports memorabilia, dolls, manuscripts, stamps, coins, guns, phonograph records, and natural history items. Free income tax Many of the elements of valuation that apply to paintings and other objects of art, discussed earlier, also apply to miscellaneous collections. Free income tax Reference material. Free income tax   Publications available to help you determine the value of many kinds of collections include catalogs, dealers' price lists, and specialized hobby periodicals. Free income tax When using one of these price guides, you must use the current edition at the date of contribution. Free income tax However, these sources are not always reliable indicators of FMV and should be supported by other evidence. Free income tax   For example, a dealer may sell an item for much less than is shown on a price list, particularly after the item has remained unsold for a long time. Free income tax The price an item sold for in an auction may have been the result of a rigged sale or a mere bidding duel. Free income tax The appraiser must analyze the reference material, and recognize and make adjustments for misleading entries. Free income tax If you are donating a valuable collection, you should get an appraisal. Free income tax If your donation appears to be of little value, you may be able to make a satisfactory valuation using reference materials available at a state, city, college, or museum library. Free income tax Stamp collections. Free income tax   Most libraries have catalogs or other books that report the publisher's estimate of values. Free income tax Generally, two price levels are shown for each stamp: the price postmarked and the price not postmarked. Free income tax Stamp dealers generally know the value of their merchandise and are able to prepare satisfactory appraisals of valuable collections. Free income tax Coin collections. Free income tax   Many catalogs and other reference materials show the writer's or publisher's opinion of the value of coins on or near the date of the publication. Free income tax Like many other collectors' items, the value of a coin depends on the demand for it, its age, and its rarity. Free income tax Another important factor is the coin's condition. Free income tax For example, there is a great difference in the value of a coin that is in mint condition and a similar coin that is only in good condition. Free income tax   Catalogs usually establish a category for coins, based on their physical condition—mint or uncirculated, extremely fine, very fine, fine, very good, good, fair, or poor—with a different valuation for each category. Free income tax Books. Free income tax   The value of books is usually determined by selecting comparable sales and adjusting the prices according to the differences between the comparable sales and the item being evaluated. Free income tax This is difficult to do and, except for a collection of little value, should be done by a specialized appraiser. Free income tax Within the general category of literary property, there are dealers who specialize in certain areas, such as Americana, foreign imports, Bibles, and scientific books. Free income tax Modest value of collection. Free income tax   If the collection you are donating is of modest value, not requiring a written appraisal, the following information may help you in determining the FMV. Free income tax   A book that is very old, or very rare, is not necessarily valuable. Free income tax There are many books that are very old or rare, but that have little or no market value. Free income tax Condition of book. Free income tax   The condition of a book may have a great influence on its value. Free income tax Collectors are interested in items that are in fine, or at least good, condition. Free income tax When a book has a missing page, a loose binding, tears, stains, or is otherwise in poor condition, its value is greatly lowered. Free income tax Other factors. Free income tax   Some other factors in the valuation of a book are the kind of binding (leather, cloth, paper), page edges, and illustrations (drawings and photographs). Free income tax Collectors usually want first editions of books. Free income tax However, because of changes or additions, other editions are sometimes worth as much as, or more than, the first edition. Free income tax Manuscripts, autographs, diaries, and similar items. Free income tax   When these items are handwritten, or at least signed by famous people, they are often in demand and are valuable. Free income tax The writings of unknowns also may be of value if they are of unusual historical or literary importance. Free income tax Determining the value of such material is difficult. Free income tax For example, there may be a great difference in value between two diaries that were kept by a famous person—one kept during childhood and the other during a later period in his or her life. Free income tax The appraiser determines a value in these cases by applying knowledge and judgment to such factors as comparable sales and conditions. Free income tax Signatures. Free income tax   Signatures, or sets of signatures, that were cut from letters or other papers usually have little or no value. Free income tax But complete sets of the signatures of U. Free income tax S. Free income tax presidents are in demand. Free income tax Cars, Boats, and Aircraft If you donate a car, a boat, or an aircraft to a charitable organization, its FMV must be determined. Free income tax Certain commercial firms and trade organizations publish monthly or seasonal guides for different regions of the country, containing complete dealer sale prices or dealer average prices for recent model years. Free income tax Prices are reported for each make, model, and year. Free income tax These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Free income tax The prices are not “official,” and these publications are not considered an appraisal of any specific donated property. Free income tax But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Free income tax These publications are sometimes available from public libraries or at a bank, credit union, or finance company. Free income tax You can also find pricing information about used cars on the Internet. Free income tax An acceptable measure of the FMV of a donated car, boat, or airplane is an amount not in excess of the price listed in a used vehicle pricing guide for a private party sale, not the dealer retail value, of a similar vehicle. Free income tax However, the FMV may be less than that amount if the vehicle has engine trouble, body damage, high mileage, or any type of excessive wear. Free income tax The FMV of a donated vehicle is the same as the price listed in a used vehicle pricing guide for a private party sale only if the guide lists a sales price for a vehicle that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, and with the same or similar warranties as the donated vehicle. Free income tax Example. Free income tax You donate a used car in poor condition to a local high school for use by students studying car repair. Free income tax A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Free income tax However, the guide shows the price for a private party sale of the car is only $750. Free income tax The FMV of the car is considered to be no more than $750. Free income tax Boats. Free income tax   Except for inexpensive small boats, the valuation of boats should be based on an appraisal by a marine surveyor because the physical condition is so critical to the value. Free income tax More information. Free income tax   Your deduction for a donated car, boat, or airplane generally is limited to the gross proceeds from its sale by the qualified organization. Free income tax This rule applies if the claimed value of the donated vehicle is more than $500. Free income tax In certain cases, you can deduct the vehicle's FMV. Free income tax For details, see Publication 526. Free income tax Inventory If you donate any inventory item to a charitable organization, the amount of your deductible contribution generally is the FMV of the item, minus any gain you would have realized if you had sold the item at its FMV on the date of the gift. Free income tax For more information, see Publication 526. Free income tax Patents To determine the FMV of a patent, you must take into account, among other factors: Whether the patented technology has been made obsolete by other technology; Any restrictions on the donee's use of, or ability to transfer, the patented technology; and The length of time remaining before the patent expires. Free income tax However, your deduction for a donation of a patent or other intellectual property is its FMV, minus any gain you would have realized if you had sold the property at its FMV on the date of the gift. Free income tax Generally, this means your deduction is the lesser of the property's FMV or its basis. Free income tax For details, see Publication 526. Free income tax Stocks and Bonds The value of stocks and bonds is the FMV of a share or bond on the valuation date. Free income tax See Date of contribution, earlier, under What Is Fair Market Value (FMV). Free income tax Selling prices on valuation date. Free income tax   If there is an active market for the contributed stocks or bonds on a stock exchange, in an over-the-counter market, or elsewhere, the FMV of each share or bond is the average price between the highest and lowest quoted selling prices on the valuation date. Free income tax For example, if the highest selling price for a share was $11, and the lowest $9, the average price is $10. Free income tax You get the average price by adding $11 and $9 and dividing the sum by 2. Free income tax No sales on valuation date. Free income tax   If there were no sales on the valuation date, but there were sales within a reasonable period before and after the valuation date, you determine FMV by taking the average price between the highest and lowest sales prices on the nearest date before and on the nearest date after the valuation date. Free income tax Then you weight these averages in inverse order by the respective number of trading days between the selling dates and the valuation date. Free income tax Example. Free income tax   On the day you gave stock to a qualified organization, there were no sales of the stock. Free income tax Sales of the stock nearest the valuation date took place two trading days before the valuation date at an average selling price of $10 and three trading days after the valuation date at an average selling price of $15. Free income tax The FMV on the valuation date was $12, figured as follows: [(3 x $10) + (2 x $15)] ÷ 5 = $12 Listings on more than one stock exchange. Free income tax   Stocks or bonds listed on more than one stock exchange are valued based on the prices of the exchange on which they are principally dealt. Free income tax This applies if these prices are published in a generally available listing or publication of general circulation. Free income tax If this is not applicable, and the stocks or bonds are reported on a composite listing of combined exchanges in a publication of general circulation, use the composite list. Free income tax See also Unavailable prices or closely held corporation, later. Free income tax Bid and asked prices on valuation date. Free income tax   If there were no sales within a reasonable period before and after the valuation date, the FMV is the average price between the bona fide bid and asked prices on the valuation date. Free income tax Example. Free income tax Although there were no sales of Blue Corporation stock on the valuation date, bona fide bid and asked prices were available on that date of $14 and $16, respectively. Free income tax The FMV is $15, the average price between the bid and asked prices. Free income tax No prices on valuation date. Free income tax   If there were no prices available on the valuation date, you determine FMV by taking the average prices between the bona fide bid and asked prices on the closest trading date before and after the valuation date. Free income tax Both dates must be within a reasonable period. Free income tax Then you weight these averages in inverse order by the respective number of trading days between the bid and asked dates and the valuation date. Free income tax Example. Free income tax On the day you gave stock to a qualified organization, no prices were available. Free income tax Bona fide bid and asked prices 3 days before the valuation date were $10 and 2 days after the valuation date were $15. Free income tax The FMV on the valuation date is $13, figured as follows: [(2 x $10) + (3 x $15)] ÷ 5 = $13 Prices only before or after valuation date, but not both. Free income tax   If no selling prices or bona fide bid and asked prices are available on a date within a reasonable period before the valuation date, but are available on a date within a reasonable period after the valuation date, or vice versa, then the average price between the highest and lowest of such available prices may be treated as the value. Free income tax Large blocks of stock. Free income tax   When a large block of stock is put on the market, it may lower the selling price of the stock if the supply is greater than the demand. Free income tax On the other hand, market forces may exist that will afford higher prices for large blocks of stock. Free income tax Because of the many factors to be considered, determining the value of large blocks of stock usually requires the help of experts specializing in underwriting large quantities of securities, or in trading in the securities of the industry of which the particular company is a part. Free income tax Unavailable prices or closely held corporation. Free income tax   If selling prices or bid and asked prices are not available, or if securities of a closely held corporation are involved, determine the FMV by considering the following factors. Free income tax For bonds, the soundness of the security, the interest yield, the date of maturity, and other relevant factors. Free income tax For shares of stock, the company's net worth, prospective earning power and dividend-paying capacity, and other relevant factors. Free income tax Other factors. Free income tax   Other relevant factors include: The nature and history of the business, especially its recent history, The goodwill of the business, The economic outlook in the particular industry, The company's position in the industry, its competitors, and its management, and The value of securities of corporations engaged in the same or similar business. Free income tax For preferred stock, the most important factors are its yield, dividend coverage, and protection of its liquidation preference. Free income tax   You should keep complete financial and other information on which the valuation is based. Free income tax This includes copies of reports of examinations of the company made by accountants, engineers, or any technical experts on or close to the valuation date. Free income tax Restricted securities. Free income tax   Some classes of stock cannot be traded publicly because of restrictions imposed by the Securities and Exchange Commission, or by the corporate charter or a trust agreement. Free income tax These restricted securities usually trade at a discount in relation to freely traded securities. Free income tax   To arrive at the FMV of restricted securities, factors that you must consider include the resale provisions found in the restriction agreements, the relative negotiating strengths of the buyer and seller, and the market experience of freely traded securities of the same class as the restricted securities. Free income tax Real Estate Because each piece of real estate is unique and its valuation is complicated, a detailed appraisal by a professional appraiser is necessary. Free income tax The appraiser must be thoroughly trained in the application of appraisal principles and theory. Free income tax In some instances the opinions of equally qualified appraisers may carry unequal weight, such as when one appraiser has a better knowledge of local conditions. Free income tax The appraisal report must contain a complete description of the property, such as street address, legal description, and lot and block number, as well as physical features, condition, and dimensions. Free income tax The use to which the property is put, zoning and permitted uses, and its potential use for other higher and better uses are also relevant. Free income tax In general, there are three main approaches to the valuation of real estate. Free income tax An appraisal may require the combined use of two or three methods rather than one method only. Free income tax 1. Free income tax Comparable Sales The comparable sales method compares the donated property with several similar properties that have been sold. Free income tax The selling prices, after adjustments for differences in date of sale, size, condition, and location, would then indicate the estimated FMV of the donated property. Free income tax If the comparable sales method is used to determine the value of unimproved real property (land without significant buildings, structures, or any other improvements that add to its value), the appraiser should consider the following factors when comparing the potential comparable property and the donated property: Location, size, and zoning or use restrictions, Accessibility and road frontage, and available utilities and water rights, Riparian rights (right of access to and use of the water by owners of land on the bank of a river) and existing easements, rights-of-way, leases, etc. Free income tax , Soil characteristics, vegetative cover, and status of mineral rights, and Other factors affecting value. Free income tax For each comparable sale, the appraisal must include the names of the buyer and seller, the deed book and page number, the date of sale and selling price, a property description, the amount and terms of mortgages, property surveys, the assessed value, the tax rate, and the assessor's appraised FMV. Free income tax The comparable selling prices must be adjusted to account for differences between the sale property and the donated property. Free income tax Because differences of opinion may arise between appraisers as to the degree of comparability and the amount of the adjustment considered necessary for comparison purposes, an appraiser should document each item of adjustment. Free income tax Only comparable sales having the least adjustments in terms of items and/or total dollar adjustments should be considered as comparable to the donated property. Free income tax 2. Free income tax Capitalization of Income This method capitalizes the net income from the property at a rate that represents a fair return on the particular investment at the particular time, considering the risks involved. Free income tax The key elements are the determination of the income to be capitalized and the rate of capitalization. Free income tax 3. Free income tax Replacement Cost New or Reproduction Cost Minus Observed Depreciation This method, used alone, usually does not result in a determination of FMV. Free income tax Instead, it generally tends to set the upper limit of value, particularly in periods of rising costs, because it is reasonable to assume that an informed buyer will not pay more for the real estate than it would cost to reproduce a similar property. Free income tax Of course, this reasoning does not apply if a similar property cannot be created because of location, unusual construction, or some other reason. Free income tax Generally, this method serves to support the value determined from other methods. Free income tax When the replacement cost method is applied to improved realty, the land and improvements are valued separately. Free income tax The replacement cost of a building is figured by considering the materials, the quality of workmanship, and the number of square feet or cubic feet in the building. Free income tax This cost represents the total cost of labor and material, overhead, and profit. Free income tax After the replacement cost has been figured, consideration must be given to the following factors: Physical deterioration—the wear and tear on the building itself, Functional obsolescence—usually in older buildings with, for example, inadequate lighting, plumbing, or heating, small rooms, or a poor floor plan, and Economic obsolescence—outside forces causing the whole area to become less desirable. Free income tax Interest in a Business The FMV of any interest in a business, whether a sole proprietorship or a partnership, is the amount that a willing buyer would pay for the interest to a willing seller after consideration of all relevant factors. Free income tax The relevant factors to be considered in valuing the business are: The FMV of the assets of the business, The demonstrated earnings capacity of the business, based on a review of past and current earnings, and The other factors used in evaluating corporate stock, if they apply. Free income tax The value of the goodwill of the business should also be taken into consideration. Free income tax You should keep complete financial and other information on which you base the valuation. Free income tax This includes copies of reports of examinations of the business made by accountants, engineers, or any technical experts on or close to the valuation date. Free income tax Annuities, Interests for Life or Terms of Years, Remainders, and Reversions The value of these kinds of property is their present value, except in the case of annuities under contracts issued by companies regularly engaged in their sale. Free income tax The valuation of these commercial annuity contracts and of insurance policies is discussed later under Certain Life Insurance and Annuity Contracts. Free income tax To determine present value, you must know the applicable interest rate and use actuarial tables. Free income tax Interest rate. Free income tax   The applicable interest rate varies. Free income tax It is announced monthly in a news release and published in the Internal Revenue Bulletin as a Revenue Ruling. Free income tax The interest rate to use is under the heading “Rate Under Section 7520” for a given month and year. Free income tax You can call the IRS office at 1-800-829-1040 to obtain this rate. Free income tax Actuarial tables. Free income tax   You need to refer to actuarial tables to determine a qualified interest in the form of an annuity, any interest for life or a term of years, or any remainder interest to a charitable organization. Free income tax   Use the valuation tables set forth in IRS Publications 1457, Actuarial Values (Book Aleph), and 1458, Actuarial Values (Book Beth). Free income tax Both of these publications provide tables containing actuarial factors to be used in determining the present value of an annuity, an interest for life or for a term of years, or a remainder or reversionary interest. Free income tax For qualified charitable transfers, you can use the factor for the month in which you made the contribution or for either of the 2 months preceding that month. Free income tax   Publication 1457 also contains actuarial factors for computing the value of a remainder interest in a charitable remainder annuity trust and a pooled income fund. Free income tax Publication 1458 contains the factors for valuing the remainder interest in a charitable remainder unitrust. Free income tax You can download Publications 1457 and 1458 from www. Free income tax irs. Free income tax gov. Free income tax In addition, they are available for purchase via the website of the U. Free income tax S. Free income tax Government Printing Office, by phone at (202) 512-1800, or by mail from the: Superintendent of Documents P. Free income tax O. Free income tax Box 371954 Pittsburgh, PA 15250-7954 Tables containing actuarial factors for transfers to pooled income funds may also be found in Income Tax Regulation 1. Free income tax 642(c)-6(e)(6), transfers to charitable remainder unitrusts in Regulation 1. Free income tax 664-4(e), and other transfers in Regulation 20. Free income tax 2031-7(d)(6). Free income tax Special factors. Free income tax   If you need a special factor for an actual transaction, you can request a letter ruling. Free income tax Be sure to include the date of birth of each person the duration of whose life may affect the value of the interest. Free income tax Also include copies of the relevant instruments. Free income tax IRS charges a user fee for providing special factors. Free income tax   For more information about requesting a ruling, see Revenue Procedure 2006-1 (or annual update), 2006-1 I. Free income tax R. Free income tax B. Free income tax 1. Free income tax Revenue Procedure 2006-1 is available at www. Free income tax irs. Free income tax gov/irb/2006-01_IRB/ar06. Free income tax html. Free income tax   For information on the circumstances under which a charitable deduction may be allowed for the donation of a partial interest in property not in trust, see Partial Interest in Property Not in Trust, later. Free income tax Certain Life Insurance and Annuity Contracts The value of an annuity contract or a life insurance policy issued by a company regularly engaged in the sale of such contracts or policies is the amount that company would charge for a comparable contract. Free income tax But if the donee of a life insurance policy may reasonably be expected to cash the policy rather than hold it as an investment, then the FMV is the cash surrender value rather than the replacement cost. Free income tax If an annuity is payable under a combination annuity contract and life insurance policy (for example, a retirement income policy with a death benefit) and there was no insurance element when it was transferred to the charity, the policy is treated as an annuity contract. Free income tax Partial Interest in Property Not in Trust Generally, no deduction is allowed for a charitable contribution, not made in trust, of less than your entire interest in property. Free income tax However, this does not apply to a transfer of less than your entire interest if it is a transfer of: A remainder interest in your personal residence or farm, An undivided part of your entire interest in property, or A qualified conservation contribution. Free income tax Remainder Interest in Real Property The amount of the deduction for a donation of a remainder interest in real property is the FMV of the remainder interest at the time of the contribution. Free income tax To determine this value, you must know the FMV of the property on the date of the contribution. Free income tax Multiply this value by the appropriate factor. Free income tax Publications 1457 and 1458 contain these factors. Free income tax You must make an adjustment for depreciation or depletion using the factors shown in Publication 1459, Actuarial Values (Book Gimel). Free income tax You can use the factors for the month in which you made the contribution or for either of the two months preceding that month. Free income tax See the earlier discussion on Annuities, Interests for Life or Terms of Years, Remainders, and Reversions. Free income tax You can download Publication 1459 from www. Free income tax irs. Free income tax gov. Free income tax For this purpose, the term “depreciable property” means any property subject to wear and tear or obsolescence, even if not used in a trade or business or for the production of income. Free income tax If the remainder interest includes both depreciable and nondepreciable property, for example a house and land, the FMV must be allocated between each kind of property at the time of the contribution. Free income tax This rule also applies to a gift of a remainder interest that includes property that is part depletable and part not depletable. Free income tax Take into account depreciation or depletion only for the property that is subject to depreciation or depletion. Free income tax For more information, see section 1. Free income tax 170A-12 of the Income Tax Regulations. Free income tax Undivided Part of Your Entire Interest A contribution of an undivided part of your entire interest in property must consist of a part of each and every substantial interest or right you own in the property. Free income tax It must extend over the entire term of your interest in the property. Free income tax For example, you are entitled to the income from certain property for your life (life estate) and you contribute 20% of that life estate to a qualified organization. Free income tax You can claim a deduction for the contribution if you do not have any other interest in the property. Free income tax To figure the value of a contribution involving a partial interest, see Publication 1457. Free income tax If the only interest you own in real property is a remainder interest and you transfer part of that interest to a qualified organization, see the previous discussion on valuation of a remainder interest in real property. Free income tax Qualified Conservation Contribution A qualified conservation contribution is a contribution of a qualified real property interest to a qualified organization to be used only for conservation purposes. Free income tax Qualified organization. Free income tax   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charitable, religious, scientific, literary, educational, etc. Free income tax , organization, or An organization that is controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Free income tax The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Free income tax Conservation purposes. Free income tax   Your contribution must be made only for one of the following conservation purposes. Free income tax Preserving land areas for outdoor recreation by, or for the education of, the general public. Free income tax Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Free income tax Preserving open space, including farmland and forest land, if it yields a significant public benefit. Free income tax It must be either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Free income tax Preserving a historically important land area or a certified historic structure. Free income tax There must be some visual public access to the property. Free income tax Factors used in determining the type and amount of public access required include the historical significance of the property, the remoteness or accessibility of the site, and the extent to which intrusions on the privacy of individuals living on the property would be unreasonable. Free income tax Building in registered historic district. Free income tax   A contribution after July 25, 2006, of a qualified real property interest that is an easement or other restriction on the exterior of a building in a registered historic district is deductible only if it meets all of the following three conditions. Free income tax The restriction must preserve the entire exterior of the building and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Free income tax You and the organization receiving the contribution must enter into a written agreement certifying, that the organization is a qualified organization and that it has the resources and commitment to maintain the property as donated. Free income tax If you make the contribution in a tax year beginning after August 17, 2006, you must include with your return: A qualified appraisal, Photographs of the building's entire exterior, and A description of all restrictions on development of the building, such as zoning laws and restrictive covenants. Free income tax   If you make this type of contribution after February 12, 2007, and claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Free income tax See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Free income tax Qualified real property interest. Free income tax   This is any of the following interests in real property. Free income tax Your entire interest in real estate other than a mineral interest (subsurface oil, gas, or other minerals, and the right of access to these minerals). Free income tax A remainder interest. Free income tax A restriction (granted in perpetuity) on the use that may be made of the real property. Free income tax Valuation. Free income tax   A qualified real property interest described in (1) should be valued in a manner that is consistent with the type of interest transferred. Free income tax If you transferred all the interest in the property, the FMV of the property is the amount of the contribution. Free income tax If you do not transfer the mineral interest, the FMV of the surface rights in the property is the amount of the contribution. Free income tax   If you owned only a remainder interest or an income interest (life estate), see Undivided Part of Your Entire Interest, earlier. Free income tax If you owned the entire property but transferred only a remainder interest (item (2)), see Remainder Interest in Real Property, earlier. Free income tax   In determining the value of restrictions, you should take into account the selling price in arm's-length transactions of other properties that have comparable restrictions. Free income tax If there are no comparable sales, the restrictions are valued indirectly as the difference between the FMVs of the property involved before and after the grant of the restriction. Free income tax   The FMV of the property before contribution of the restriction should take into account not only current use but the likelihood that the property, without the restriction, would be developed. Free income tax You should also consider any zoning, conservation, or historical preservation laws that would restrict development. Free income tax Granting an easement may increase, rather than reduce, the value of property, and in such a situation no deduction would be allowed. Free income tax Example. Free income tax   You own 10 acres of farmland. Free income tax Similar land in the area has an FMV of $2,000 an acre. Free income tax However, land in the general area that is restricted solely to farm use has an FMV of $1,500 an acre. Free income tax Your county wants to preserve open space and prevent further development in your area. Free income tax   You grant to the county an enforceable open space easement in perpetuity on 8 of the 10 acres, restricting its use to farmland. Free income tax The value of this easement is $4,000, determined as follows: FMV of the property before granting easement:   $2,000 × 10 acres $20,000 FMV of the property after granting easement:   $1,500 × 8 acres $12,000   $2,000 × 2 acres 4,000 16,000 Value of easement   $4,000   If you later transfer in fee your remaining interest in the 8 acres to another qualified organization, the FMV of your remaining interest is the FMV of the 8 acres reduced by the FMV of the easement granted to the first organization. Free income tax More information. Free income tax   For more information about qualified conservation contributions, see Publication 526. Free income tax Appraisals Appraisals are not necessary for items of property for which you claim a deduction of $5,000 or less. Free income tax (There is one exception, described next, for certain clothing and household items. Free income tax ) However, you generally will need an appraisal for donated property for which you claim a deduction of more than $5,000. Free income tax There are exceptions. Free income tax See Deductions of More Than $5,000, later. Free income tax The weight given an appraisal depends on the completeness of the report, the qualifications of the appraiser, and the appraiser's demonstrated knowledge of the donated property. Free income tax An appraisal must give all the facts on which to base an intelligent judgment of the value of the property. Free income tax The appraisal will not be given much weight if: All the factors that apply are not considered, The opinion is not supported with facts, such as purchase price and comparable sales, or The opinion is not consistent with known facts. Free income tax The appraiser's opinion is never more valid than the facts on which it is based; without these facts it is simply a guess. Free income tax The opinion of a person claiming to be an expert is not binding on the Internal Revenue Service. Free income tax All facts associated with the donation must be considered. Free income tax Deduction over $500 for certain clothing or household items. Free income tax   You must include with your return a qualified appraisal of any single item of clothing or any household item that is not in good used condition or better, that you donated after August 17, 2006, and for which you deduct more than $500. Free income tax See Household Goods and Used Clothing, earlier. Free income tax Cost of appraisals. Free income tax   You may not take a charitable contribution deduction for fees you pay for appraisals of your donated property. Free income tax However, these fees may qualify as a miscellaneous deduction, subject to the 2% limit, on Schedule A (Form 1040) if paid to determine the amount allowable as a charitable contribution. Free income tax Deductions of More Than $5,000 Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser, and you must attach Section B of Form 8283 to your tax return. Free income tax There are exceptions, discussed later. Free income tax You should keep the appraiser's report with your written records. Free income tax Records are discussed in Publication 526. Free income tax The phrase “similar items” means property of the same generic category or type (whether or not donated to the same donee), such as stamp collections, coin collections, lithographs, paintings, photographs, books, nonpublicly traded stock, nonpublicly traded securities other than nonpublicly traded stock, land, buildings, clothing, jewelry, furniture, electronic equipment, household appliances, toys, everyday kitchenware, china, crystal, or silver. Free income tax For example, if you give books to three schools and you deduct $2,000, $2,500, and $900, respectively, your claimed deduction is more than $5,000 for these books. Free income tax You must get a qualified appraisal of the books and for each school you must attach a fully completed Form 8283, Section B, to your tax return. Free income tax Exceptions. Free income tax   You do not need an appraisal if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane) for which your deduction is limited to the gross proceeds from its sale, Qualified intellectual property, such as a patent, Certain publicly traded securities described next, Inventory and other property donated by a corporation that are “qualified contributions” for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A) of the Internal Revenue Code, or Stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. Free income tax   Although an appraisal is not required for the types of property just listed, you must provide certain information about a donation of any of these types of property on Form 8283. Free income tax Publicly traded securities. Free income tax   Even if your claimed deduction is more than $5,000, neither a qualified appraisal nor Section B of Form 8283 is required for publicly traded securities that are: Listed on a stock exchange in which quotations are published on a daily basis, Regularly traded in a national or regional over-the-counter market for which published quotations are available, or Shares of an open-end investment company (mutual fund) for which quotations are published on a daily basis in a newspaper of general circulation throughout the United States. Free income tax Publicly traded securities that meet these requirements must be reported on Form 8283, Section A. Free income tax   A qualified appraisal is not required, but Form 8283, Section B, Parts I and IV, must be completed, for an issue of a security that does not meet the requirements just listed but does meet these requirements: The issue is regularly traded during the computation period (defined later) in a market for which there is an “interdealer quotation system” (defined later), The issuer or agent computes the “average trading price” (defined later) for the same issue for the computation period, The average trading price and total volume of the issue during the computation period are published in a newspaper of general circulation throughout the United States, not later than the last day of the month following the end of the calendar quarter in which the computation period ends, The issuer or agent keeps books and records that list for each transaction during the computation period the date of settlement of the transaction, the name and address of the broker or dealer making the market in which the transaction occurred, and the trading price and volume, and The issuer or agent permits the Internal Revenue Service to review the books and records described in item (4) with respect to transactions during the computation period upon receiving reasonable notice. Free income tax   An interdealer quotation system is any system of general circulation to brokers and dealers that regularly disseminates quotations of obligations by two or more identified brokers or dealers who are not related to either the issuer or agent who computes the average trading price of the security. Free income tax A quotation sheet prepared and distributed by a broker or dealer in the regular course of business and containing only quotations of that broker or dealer is not an interdealer quotation system. Free income tax   The average trading price is the average price of all transactions (weighted by volume), other than original issue or redemption transactions, conducted through a United States office of a broker or dealer who maintains a market in the issue of the security during the computation period. Free income tax Bid and asked quotations are not taken into account. Free income tax   The computation period is weekly during October through December and monthly during January through September. Free income tax The weekly computation periods during October through December begin with the first Monday in October and end with the first Sunday following the last Monday in December. Free income tax Nonpublicly traded stock. Free income tax   If you contribute nonpublicly traded stock, for which you claim a deduction of $10,000 or less, a qualified appraisal is not required. Free income tax However, you must attach Form 8283 to your tax return, with Section B, Parts I and IV, completed. Free income tax Deductions of More Than $500,000 If you claim a deduction of more than $500,000 for a donation of property, you must attach a qualified appraisal of the property to your return. Free income tax This does not apply to contributions of cash, inventory, publicly traded stock, or intellectual property. Free income tax If you do not attach the appraisal, you cannot deduct your contribution, unless your failure to attach the appraisal is due to reasonable cause and not to willful neglect. Free income tax Qualified Appraisal Generally, if the claimed deduction for an item or group of similar items of donated property is more than $5,000, you must get a qualified appraisal made by a qualified appraiser. Free income tax You must also complete Form 8283, Section B, and attach it to your tax return. Free income tax See Deductions of More Than $5,000, earlier. Free income tax A qualified appraisal is an appraisal document that: Is made, signed, and dated by a qualified appraiser (defined later) in accordance with generally accepted appraisal standards, Meets the relevant requirements of Regulations section 1. Free income tax 170A-13(c)(3) and Notice 2006-96, 2006-46 I. Free income tax R. Free income tax B. Free income tax 902 (available at www. Free income tax irs. Free income tax gov/irb/2006-46_IRB/ar13. Free income tax html), Relates to an appraisal made not earlier than 60 days before the date of contribution of the appraised property, Does not involve a prohibited appraisal fee, and Includes certain information (covered later). Free income tax You must receive the qualified appraisal before the due date, including extensions, of the return on which a charitable contribution deduction is first claimed for the donated property. Free income tax If the deduction is first claimed on an amended return, the qualified appraisal must be received before the date on which the amended return is filed. Free income tax Form 8283, Section B, must be attached to your tax return. Free income tax Generally, you do not need to attach the qualified appraisal itself, but you should keep a copy as long as it may be relevant under the tax law. Free income tax There are four exceptions. Free income tax If you claim a deduction of $20,000 or more for donations of art, you must attach a complete copy of the appraisal. Free income tax See Paintings, Antiques, and Other Objects of Art, earlier. Free income tax If you claim a deduction of more than $500,000 for a donation of property, you must attach the appraisal. Free income tax See Deductions of More Than $500,000, earlier. Free income tax If you claim a deduction of more than $500 for an article of clothing, or a household item, that is not in good used condition or better, that you donated after August 17, 2006, you must attach the appraisal. Free income tax See Deduction over $500 for certain clothing or household items, earlier. Free income tax If you claim a deduction in a tax year beginning after August 17, 2006, for an easement or other restriction on the exterior of a building in a historic district, you must attach the appraisal. Free income tax See Building in registered historic district, earlier. Free income tax Prohibited appraisal fee. Free income tax   Generally, no part of the fee arrangement for a qualified appraisal can be based on a percentage of the appraised value of the property. Free income tax If a fee arrangement is based on what is allowed as a deduction, after Internal Revenue Service examination or otherwise, it is treated as a fee based on a percentage of appraised value. Free income tax However, appraisals are not disqualified when an otherwise prohi