I agree with you and with John, of course, about this being an unrelated use in-kind gift.
Congress addressed the specific case of unrelated-use contributed motor vehicles, boats, and airplanes because the donors were claiming a deduction significantly larger than the benefit to the organization. But that's a special set of circumstances, because the donor's basis is almost always *higher* than the FMV with depreciated vehicles. It's a little hard to see how the donor would benefit more from the in-kind donation than from the sale and donation of the proceeds in this case, but that gets down into the details about the books and the basis and the FMV and income and so on, and the donor and their tax counsel would need to evaluate that. (And the tax code only applies the special treatment to gifts of those sorts of vehicles.)
One other factor, that you likely already have in view, is whether by accepting the in-kind contribution, it becomes *your* responsibility to manage the sale. It you're set up to do that, it's probably no big deal, esp. if it would be a relief for the donor not to have to take it on. If you're not set up to do that, it might be a more significant implicit cost of accepting the gift
My US$0.02 worth; the usual disclaimers apply.
Alan S. Hejnal
Data Quality Manager
Smithsonian Institution - Office of Advancement
600 Maryland Ave SW Ste 600E
PO Box 37012, MRC 527
Washington, DC 20013-7012
Voice: 202-633-8754 | Email: HejnalA@si.edu
Hi John, Can you clarify this statement related to this thread? "You are correct that this would be an in-kind donation. You are also correct that it would be unrelated use that could reduce their deduction (depending on their original cost basis). You are also correct that an 8282 might be needed - but perhaps not depending on the value and whether the donor files an 8283."Are you saying in the italicized that if a donee organization sells the donated property within three years that: a) filing an 8282 is not required if donor has only completed Section A of the 8283 (property gifts of less than $5,000); or b) filing an 8282 is not required if donor never submitted an 8283 to the donee organization for signature/gift verification in the first place? I researched this question recently, specifically in context of scenario B) above, and found this guidance from Alan Henjal from a AdvServ post in 2020: "A policy to only file an 8282 if your donor did an 8283 is a policy that will lead to non-compliance with your IRS obligations, at the very least. You need to do an 8282 on disposal irrespective of the 8283. It's certainly with considering valuations you signed on to in the 8283 when doing the 8282 though."I understand the question may be as much for Alan as you... Thanks,
It's also worth noting--though this doesn't apply to your case--that if an institution has a policy of only filing an 8282 if they signed an 8283, it is vital that the institution has a clear and effective policy about who is authorized to sign an 8283 on behalf of the institution. It you don't a centralized responsibility, the "institution" might well have signed and 8283 but that's only known to one person in some department, making it hard to manage the 8282 obligations.
Having a centralized process for signing any 8283s also enables the subsequent steps of the process: tracking the 8283s have been signed, designating someone to manage the 8283/8282 process, ensuring the people who have oversight of the property (say, the department for whose use the property was donated) understand their responsibility to notify the coordinating individual if the property is sold or otherwise disposed of, and following up periodically about the status of the contributed property--as well as actually filing any 8282s that are required.
Even if you always file an 8282 regardless of whether an 8283 was signed by the organization, you still have to know that the property was donated, and that it was then disposed of!
I would offer the analogy to gifts of securities: if the donor transfers the securities to you or your agent, then there is a gift pf property, but if the donor or the donor's agent sold the property and sent you the proceeds, then that is a cash gift.
If you didn't accept the property and have control over it, but only received the proceeds, it wouldn't be a gift of the property.