Hello – I understand that items including but not limited to sales tax, delivery fees, and shipping costs are not considered part of the fair market value of an item. Is this explicitly stated in the CASE standards or in IRS regulations? If so, can you provide me with the specific location in the standards or regulations documentation? I am looking to add the specific reference to my organization's gift-in-kind policy. Thanks.
Maybe just one or two additional thoughts.
The most fundamental level of tax deductions for charitable contributions is the requirement that a charitable contribution consists of either cash or property other than cash, and taxes and shipping costs incurred by the donor are neither property or cash.
Similarly, for internal valuation for CASE purposes, the FMV is what the recipient would have had to pay for the property if the recipient had purchased the item rather than receiving it as a gift. So, for example, if there is a non-profit discount for an item, that is what the charity would have had to pay and is therefore the value of the gift, not the higher price that the donor may have had to pay for the item as a private individual. Similarly, for the most part, qualified charitable organizations are exempt from paying sales tax on expenditures made in support of their mission, so the sales tax is not, in any case, part of what the qualified recipient would have had to pay.
The interesting analysis for me has always been at what point the contributed property becomes the charitable recipient's property. If, for example, the charity takes possession of the, say, horse, or piano, or office furniture while the property is a thousand miles distant, then one might argue that transporting the property is the responsibility of the recipient, and if the donor relieves the recipient of that expense of transporting the property, either by transporting the property or paying for the transport, that is a gift underwriting the institution's expense. However, in the general two-party donation transaction, the charitable donation is instead not considered to have taken place until the property has been delivered to the charity, that is, until the recipient has the property "to have and to hold" in the venerable language (which we now encounter more commonly in another context). And, until the donation has been completed, the associated expenses, like delivering the property, are the donor's, not the recipient's.
My US$0.02 worth; the usual disclaimers apply.
Alan S. Hejnal
Data Quality Manager
Smithsonian Institution - Office of Advancement
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