When an Appraisal for Donations of Used Clothing Is Required

In 2017, a taxpayer made 173 separate trips to Goodwill and the Salvation Army to donate used clothing that he claimed as in “good used condition.” He got a receipt for each donation; each was under $250. If valued at $250 or more, then a written acknowledgment is required; if valued at $5,000 or more, a full appraisal is required. In this latest case before the Tax Court, the total amount the less-than $250 donations to each of these charities exceeded $10,000. On Form 8283 attached to his 2017 return, the taxpayer did not include any appraisal for these items. The Tax Court held that he could not take deductions for Goodwill and Salvation Army donations because of the lack of a qualified appraisal (Duncan Bass, TC Memo 2023-41).

For any noncash charitable contribution exceeding $5,000, the donor is required to (1) obtain a qualified appraisal for the property contributed, (2) attach a fully completed appraisal summary to the tax return for the year the deduction is claimed, and (3) maintain records containing certain information. For purposes of the $5,000 threshold, the aggregate of similar items of property must be considered, whether the items are donated to one or multiple charities. The receipts from the charities in this case did not rise to the level of a “qualified appraisal or statement of value.” In fact, the receipts from each charity left blank the section for valuing items donated, instructing that it was up to the taxpayer to fill in the blank…the receipts did not meet the tax law requirement to get an appraisal if the total amount of similar items donated exceeds $5,000 (for example, all clothing donations for the year, even if no one donation exceed $250, as was the case in this case).