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Amended Tax Form

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Amended Tax Form

Amended tax form 13. Amended tax form   Basis of Property Table of Contents Introduction Useful Items - You may want to see: Cost BasisReal Property Adjusted BasisIncreases to Basis Decreases to Basis Basis Other Than CostProperty Received for Services Taxable Exchanges Involuntary Conversions Nontaxable Exchanges Property Transferred From a Spouse Property Received as a Gift Inherited Property Property Changed From Personal to Business or Rental Use Stocks and Bonds Introduction This chapter discusses how to figure your basis in property. Amended tax form It is divided into the following sections. Amended tax form Cost basis. Amended tax form Adjusted basis. Amended tax form Basis other than cost. Amended tax form Your basis is the amount of your investment in property for tax purposes. Amended tax form Use the basis to figure gain or loss on the sale, exchange, or other disposition of property. Amended tax form Also use it to figure deductions for depreciation, amortization, depletion, and casualty losses. Amended tax form If you use property for both business or investment purposes and for personal purposes, you must allocate the basis based on the use. Amended tax form Only the basis allocated to the business or investment use of the property can be depreciated. Amended tax form Your original basis in property is adjusted (increased or decreased) by certain events. Amended tax form For example, if you make improvements to the property, increase your basis. Amended tax form If you take deductions for depreciation or casualty losses, or claim certain credits, reduce your basis. Amended tax form Keep accurate records of all items that affect the basis of your property. Amended tax form For more information on keeping records, see chapter 1. Amended tax form Useful Items - You may want to see: Publication 15-B Employer's Tax Guide to Fringe Benefits 525 Taxable and Nontaxable Income 535 Business Expenses 537 Installment Sales 544 Sales and Other Dispositions of Assets 550 Investment Income and Expenses 551 Basis of Assets 946 How To Depreciate Property Cost Basis The basis of property you buy is usually its cost. Amended tax form The cost is the amount you pay in cash, debt obligations, other property, or services. Amended tax form Your cost also includes amounts you pay for the following items: Sales tax, Freight, Installation and testing, Excise taxes, Legal and accounting fees (when they must be capitalized), Revenue stamps, Recording fees, and Real estate taxes (if you assume liability for the seller). Amended tax form In addition, the basis of real estate and business assets may include other items. Amended tax form Loans with low or no interest. Amended tax form    If you buy property on a time-payment plan that charges little or no interest, the basis of your property is your stated purchase price minus any amount considered to be unstated interest. Amended tax form You generally have unstated interest if your interest rate is less than the applicable federal rate. Amended tax form   For more information, see Unstated Interest and Original Issue Discount (OID) in Publication 537. Amended tax form Real Property Real property, also called real estate, is land and generally anything built on, growing on, or attached to land. Amended tax form If you buy real property, certain fees and other expenses you pay are part of your cost basis in the property. Amended tax form Lump sum purchase. Amended tax form   If you buy buildings and the land on which they stand for a lump sum, allocate the cost basis among the land and the buildings. Amended tax form Allocate the cost basis according to the respective fair market values (FMVs) of the land and buildings at the time of purchase. Amended tax form Figure the basis of each asset by multiplying the lump sum by a fraction. Amended tax form The numerator is the FMV of that asset and the denominator is the FMV of the whole property at the time of purchase. Amended tax form    If you are not certain of the FMVs of the land and buildings, you can allocate the basis according to their assessed values for real estate tax purposes. Amended tax form Fair market value (FMV). Amended tax form   FMV is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the necessary facts. Amended tax form Sales of similar property on or about the same date may be helpful in figuring the FMV of the property. Amended tax form Assumption of mortgage. Amended tax form   If you buy property and assume (or buy the property subject to) an existing mortgage on the property, your basis includes the amount you pay for the property plus the amount to be paid on the mortgage. Amended tax form Settlement costs. Amended tax form   Your basis includes the settlement fees and closing costs you paid for buying the property. Amended tax form (A fee for buying property is a cost that must be paid even if you buy the property for cash. Amended tax form ) Do not include fees and costs for getting a loan on the property in your basis. Amended tax form   The following are some of the settlement fees or closing costs you can include in the basis of your property. Amended tax form Abstract fees (abstract of title fees). Amended tax form Charges for installing utility services. Amended tax form Legal fees (including fees for the title search and preparation of the sales contract and deed). Amended tax form Recording fees. Amended tax form Survey fees. Amended tax form Transfer taxes. Amended tax form Owner's title insurance. Amended tax form Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions. Amended tax form   Settlement costs do not include amounts placed in escrow for the future payment of items such as taxes and insurance. Amended tax form   The following are some of the settlement fees and closing costs you cannot include in the basis of property. Amended tax form Casualty insurance premiums. Amended tax form Rent for occupancy of the property before closing. Amended tax form Charges for utilities or other services related to occupancy of the property before closing. Amended tax form Charges connected with getting a loan, such as points (discount points, loan origination fees), mortgage insurance premiums, loan assumption fees, cost of a credit report, and fees for an appraisal required by a lender. Amended tax form Fees for refinancing a mortgage. Amended tax form Real estate taxes. Amended tax form   If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. Amended tax form You cannot deduct them as an expense. Amended tax form    If you reimburse the seller for taxes the seller paid for you, you can usually deduct that amount as an expense in the year of purchase. Amended tax form Do not include that amount in the basis of your property. Amended tax form If you did not reimburse the seller, you must reduce your basis by the amount of those taxes. Amended tax form Points. Amended tax form   If you pay points to get a loan (including a mortgage, second mortgage, line of credit, or a home equity loan), do not add the points to the basis of the related property. Amended tax form Generally, you deduct the points over the term of the loan. Amended tax form For more information on how to deduct points, see chapter 23. Amended tax form Points on home mortgage. Amended tax form   Special rules may apply to points you and the seller pay when you get a mortgage to buy your main home. Amended tax form If certain requirements are met, you can deduct the points in full for the year in which they are paid. Amended tax form Reduce the basis of your home by any seller-paid points. Amended tax form Adjusted Basis Before figuring gain or loss on a sale, exchange, or other disposition of property or figuring allowable depreciation, depletion, or amortization, you must usually make certain adjustments (increases and decreases) to the cost basis or basis other than cost (discussed later) of the property. Amended tax form The result is the adjusted basis. Amended tax form Increases to Basis Increase the basis of any property by all items properly added to a capital account. Amended tax form Examples of items that increase basis are shown in Table 13-1. Amended tax form These include the items discussed below. Amended tax form Improvements. Amended tax form   Add to your basis in property the cost of improvements having a useful life of more than 1 year, that increase the value of the property, lengthen its life, or adapt it to a different use. Amended tax form For example, improvements include putting a recreation room in your unfinished basement, adding another bathroom or bedroom, putting up a fence, putting in new plumbing or wiring, installing a new roof, or paving your driveway. Amended tax form Assessments for local improvements. Amended tax form   Add to the basis of property assessments for improvements such as streets and sidewalks if they increase the value of the property assessed. Amended tax form Do not deduct them as taxes. Amended tax form However, you can deduct as taxes assessments for maintenance or repairs, or for meeting interest charges related to the improvements. Amended tax form Example. Amended tax form Your city changes the street in front of your store into an enclosed pedestrian mall and assesses you and other affected property owners for the cost of the conversion. Amended tax form Add the assessment to your property's basis. Amended tax form In this example, the assessment is a depreciable asset. Amended tax form Decreases to Basis Decrease the basis of any property by all items that represent a return of capital for the period during which you held the property. Amended tax form Examples of items that decrease basis are shown in Table 13-1. Amended tax form These include the items discussed below. Amended tax form Table 13-1. Amended tax form Examples of Adjustments to Basis Increases to Basis Decreases to Basis • Capital improvements: • Exclusion from income of   Putting an addition on your home subsidies for energy conservation   Replacing an entire roof measures   Paving your driveway     Installing central air conditioning • Casualty or theft loss deductions   Rewiring your home and insurance reimbursements       • Assessments for local improvements:     Water connections     Extending utility service lines to the property • Postponed gain from the sale of a home   Sidewalks • Alternative motor vehicle credit  (Form 8910)   Roads       • Alternative fuel vehicle refueling     property credit (Form 8911)           • Residential energy credits (Form 5695)       • Casualty losses: • Depreciation and section 179 deduction   Restoring damaged property     • Nontaxable corporate distributions • Legal fees:     Cost of defending and perfecting a title • Certain canceled debt excluded from   Fees for getting a reduction of an assessment income     • Zoning costs • Easements           • Adoption tax benefits Casualty and theft losses. Amended tax form   If you have a casualty or theft loss, decrease the basis in your property by any insurance proceeds or other reimbursement and by any deductible loss not covered by insurance. Amended tax form    You must increase your basis in the property by the amount you spend on repairs that restore the property to its pre-casualty condition. Amended tax form   For more information on casualty and theft losses, see chapter 25. Amended tax form Depreciation and section 179 deduction. Amended tax form   Decrease the basis of your qualifying business property by any section 179 deduction you take and the depreciation you deducted, or could have deducted (including any special depreciation allowance), on your tax returns under the method of depreciation you selected. Amended tax form   For more information about depreciation and the section 179 deduction, see Publication 946 and the Instructions for Form 4562. Amended tax form Example. Amended tax form You owned a duplex used as rental property that cost you $40,000, of which $35,000 was allocated to the building and $5,000 to the land. Amended tax form You added an improvement to the duplex that cost $10,000. Amended tax form In February last year, the duplex was damaged by fire. Amended tax form Up to that time, you had been allowed depreciation of $23,000. Amended tax form You sold some salvaged material for $1,300 and collected $19,700 from your insurance company. Amended tax form You deducted a casualty loss of $1,000 on your income tax return for last year. Amended tax form You spent $19,000 of the insurance proceeds for restoration of the duplex, which was completed this year. Amended tax form You must use the duplex's adjusted basis after the restoration to determine depreciation for the rest of the property's recovery period. Amended tax form Figure the adjusted basis of the duplex as follows: Original cost of duplex $35,000 Addition to duplex 10,000 Total cost of duplex $45,000 Minus: Depreciation 23,000 Adjusted basis before casualty $22,000 Minus: Insurance proceeds $19,700     Deducted casualty loss 1,000     Salvage proceeds 1,300 22,000 Adjusted basis after casualty $-0- Add: Cost of restoring duplex 19,000 Adjusted basis after restoration $19,000 Note. Amended tax form Your basis in the land is its original cost of $5,000. Amended tax form Easements. Amended tax form   The amount you receive for granting an easement is generally considered to be proceeds from the sale of an interest in real property. Amended tax form It reduces the basis of the affected part of the property. Amended tax form If the amount received is more than the basis of the part of the property affected by the easement, reduce your basis in that part to zero and treat the excess as a recognized gain. Amended tax form   If the gain is on a capital asset, see chapter 16 for information about how to report it. Amended tax form If the gain is on property used in a trade or business, see Publication 544 for information about how to report it. Amended tax form Exclusion of subsidies for energy conservation measures. Amended tax form   You can exclude from gross income any subsidy you received from a public utility company for the purchase or installation of an energy conservation measure for a dwelling unit. Amended tax form Reduce the basis of the property for which you received the subsidy by the excluded amount. Amended tax form For more information about this subsidy, see chapter 12. Amended tax form Postponed gain from sale of home. Amended tax form    If you postponed gain from the sale of your main home under rules in effect before May 7, 1997, you must reduce the basis of the home you acquired as a replacement by the amount of the postponed gain. Amended tax form For more information on the rules for the sale of a home, see chapter 15. Amended tax form Basis Other Than Cost There are many times when you cannot use cost as basis. Amended tax form In these cases, the fair market value or the adjusted basis of the property can be used. Amended tax form Fair market value (FMV) and adjusted basis were discussed earlier. Amended tax form Property Received for Services If you receive property for your services, include the FMV of the property in income. Amended tax form The amount you include in income becomes your basis. Amended tax form If the services were performed for a price agreed on beforehand, it will be accepted as the FMV of the property if there is no evidence to the contrary. Amended tax form Restricted property. Amended tax form   If you receive property for your services and the property is subject to certain restrictions, your basis in the property is its FMV when it becomes substantially vested. Amended tax form However, this rule does not apply if you make an election to include in income the FMV of the property at the time it is transferred to you, less any amount you paid for it. Amended tax form Property is substantially vested when it is transferable or when it is not subject to a substantial risk of forfeiture (you do not have a good chance of losing it). Amended tax form For more information, see Restricted Property in Publication 525. Amended tax form Bargain purchases. Amended tax form   A bargain purchase is a purchase of an item for less than its FMV. Amended tax form If, as compensation for services, you buy goods or other property at less than FMV, include the difference between the purchase price and the property's FMV in your income. Amended tax form Your basis in the property is its FMV (your purchase price plus the amount you include in income). Amended tax form   If the difference between your purchase price and the FMV is a qualified employee discount, do not include the difference in income. Amended tax form However, your basis in the property is still its FMV. Amended tax form See Employee Discounts in Publication 15-B. Amended tax form Taxable Exchanges A taxable exchange is one in which the gain is taxable or the loss is deductible. Amended tax form A taxable gain or deductible loss also is known as a recognized gain or loss. Amended tax form If you receive property in exchange for other property in a taxable exchange, the basis of the property you receive is usually its FMV at the time of the exchange. Amended tax form Involuntary Conversions If you receive replacement property as a result of an involuntary conversion, such as a casualty, theft, or condemnation, figure the basis of the replacement property using the basis of the converted property. Amended tax form Similar or related property. Amended tax form   If you receive replacement property similar or related in service or use to the converted property, the replacement property's basis is the same as the converted property's basis on the date of the conversion, with the following adjustments. Amended tax form Decrease the basis by the following. Amended tax form Any loss you recognize on the involuntary conversion. Amended tax form Any money you receive that you do not spend on similar property. Amended tax form Increase the basis by the following. Amended tax form Any gain you recognize on the involuntary conversion. Amended tax form Any cost of acquiring the replacement property. Amended tax form Money or property not similar or related. Amended tax form    If you receive money or property not similar or related in service or use to the converted property, and you buy replacement property similar or related in service or use to the converted property, the basis of the replacement property is its cost decreased by the gain not recognized on the conversion. Amended tax form Example. Amended tax form The state condemned your property. Amended tax form The adjusted basis of the property was $26,000 and the state paid you $31,000 for it. Amended tax form You realized a gain of $5,000 ($31,000 − $26,000). Amended tax form You bought replacement property similar in use to the converted property for $29,000. Amended tax form You recognize a gain of $2,000 ($31,000 − $29,000), the unspent part of the payment from the state. Amended tax form Your unrecognized gain is $3,000, the difference between the $5,000 realized gain and the $2,000 recognized gain. Amended tax form The basis of the replacement property is figured as follows: Cost of replacement property $29,000 Minus: Gain not recognized 3,000 Basis of replacement property $26,000 Allocating the basis. Amended tax form   If you buy more than one piece of replacement property, allocate your basis among the properties based on their respective costs. Amended tax form Basis for depreciation. Amended tax form   Special rules apply in determining and depreciating the basis of MACRS property acquired in an involuntary conversion. Amended tax form For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Amended tax form Nontaxable Exchanges A nontaxable exchange is an exchange in which you are not taxed on any gain and you cannot deduct any loss. Amended tax form If you receive property in a nontaxable exchange, its basis is generally the same as the basis of the property you transferred. Amended tax form See Nontaxable Trades in chapter 14. Amended tax form Like-Kind Exchanges The exchange of property for the same kind of property is the most common type of nontaxable exchange. Amended tax form To qualify as a like-kind exchange, the property traded and the property received must be both of the following. Amended tax form Qualifying property. Amended tax form Like-kind property. Amended tax form The basis of the property you receive is generally the same as the adjusted basis of the property you gave up. Amended tax form If you trade property in a like-kind exchange and also pay money, the basis of the property received is the adjusted basis of the property you gave up increased by the money you paid. Amended tax form Qualifying property. Amended tax form   In a like-kind exchange, you must hold for investment or for productive use in your trade or business both the property you give up and the property you receive. Amended tax form Like-kind property. Amended tax form   There must be an exchange of like-kind property. Amended tax form Like-kind properties are properties of the same nature or character, even if they differ in grade or quality. Amended tax form The exchange of real estate for real estate and personal property for similar personal property are exchanges of like-kind property. Amended tax form Example. Amended tax form You trade in an old truck used in your business with an adjusted basis of $1,700 for a new one costing $6,800. Amended tax form The dealer allows you $2,000 on the old truck, and you pay $4,800. Amended tax form This is a like-kind exchange. Amended tax form The basis of the new truck is $6,500 (the adjusted basis of the old one, $1,700, plus the amount you paid, $4,800). Amended tax form If you sell your old truck to a third party for $2,000 instead of trading it in and then buy a new one from the dealer, you have a taxable gain of $300 on the sale (the $2,000 sale price minus the $1,700 adjusted basis). Amended tax form The basis of the new truck is the price you pay the dealer. Amended tax form Partially nontaxable exchanges. Amended tax form   A partially nontaxable exchange is an exchange in which you receive unlike property or money in addition to like-kind property. Amended tax form The basis of the property you receive is the same as the adjusted basis of the property you gave up, with the following adjustments. Amended tax form Decrease the basis by the following amounts. Amended tax form Any money you receive. Amended tax form Any loss you recognize on the exchange. Amended tax form Increase the basis by the following amounts. Amended tax form Any additional costs you incur. Amended tax form Any gain you recognize on the exchange. Amended tax form If the other party to the exchange assumes your liabilities, treat the debt assumption as money you received in the exchange. Amended tax form Allocation of basis. Amended tax form   If you receive like-kind and unlike properties in the exchange, allocate the basis first to the unlike property, other than money, up to its FMV on the date of the exchange. Amended tax form The rest is the basis of the like-kind property. Amended tax form More information. Amended tax form   See Like-Kind Exchanges in chapter 1 of Publication 544 for more information. Amended tax form Basis for depreciation. Amended tax form   Special rules apply in determining and depreciating the basis of MACRS property acquired in a like-kind exchange. Amended tax form For information, see What Is the Basis of Your Depreciable Property? in chapter 1 of Publication 946. Amended tax form Property Transferred From a Spouse The basis of property transferred to you or transferred in trust for your benefit by your spouse is the same as your spouse's adjusted basis. Amended tax form The same rule applies to a transfer by your former spouse that is incident to divorce. Amended tax form However, for property transferred in trust, adjust your basis for any gain recognized by your spouse or former spouse if the liabilities assumed, plus the liabilities to which the property is subject, are more than the adjusted basis of the property transferred. Amended tax form If the property transferred to you is a series E, series EE, or series I U. Amended tax form S. Amended tax form savings bond, the transferor must include in income the interest accrued to the date of transfer. Amended tax form Your basis in the bond immediately after the transfer is equal to the transferor's basis increased by the interest income includible in the transferor's income. Amended tax form For more information on these bonds, see chapter 7. Amended tax form At the time of the transfer, the transferor must give you the records needed to determine the adjusted basis and holding period of the property as of the date of the transfer. Amended tax form For more information about the transfer of property from a spouse, see chapter 14. Amended tax form Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis to the donor just before it was given to you, its FMV at the time it was given to you, and any gift tax paid on it. Amended tax form FMV less than donor's adjusted basis. Amended tax form   If the FMV of the property at the time of the gift is less than the donor's adjusted basis, your basis depends on whether you have a gain or a loss when you dispose of the property. Amended tax form Your basis for figuring gain is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you held the property. Amended tax form Your basis for figuring loss is its FMV when you received the gift plus or minus any required adjustments to basis while you held the property. Amended tax form See Adjusted Basis , earlier. Amended tax form Example. Amended tax form You received an acre of land as a gift. Amended tax form At the time of the gift, the land had an FMV of $8,000. Amended tax form The donor's adjusted basis was $10,000. Amended tax form After you received the property, no events occurred to increase or decrease your basis. Amended tax form If you later sell the property for $12,000, you will have a $2,000 gain because you must use the donor's adjusted basis at the time of the gift ($10,000) as your basis to figure gain. Amended tax form If you sell the property for $7,000, you will have a $1,000 loss because you must use the FMV at the time of the gift ($8,000) as your basis to figure loss. Amended tax form If the sales price is between $8,000 and $10,000, you have neither gain nor loss. Amended tax form Business property. Amended tax form   If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deductions is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property. Amended tax form FMV equal to or greater than donor's adjusted basis. Amended tax form   If the FMV of the property is equal to or greater than the donor's adjusted basis, your basis is the donor's adjusted basis at the time you received the gift. Amended tax form Increase your basis by all or part of any gift tax paid, depending on the date of the gift, explained later. Amended tax form   Also, for figuring gain or loss from a sale or other disposition or for figuring depreciation, depletion, or amortization deductions on business property, you must increase or decrease your basis (the donor's adjusted basis) by any required adjustments to basis while you held the property. Amended tax form See Adjusted Basis , earlier. Amended tax form   If you received a gift during the tax year, increase your basis in the gift (the donor's adjusted basis) by the part of the gift tax paid on it due to the net increase in value of the gift. Amended tax form Figure the increase by multiplying the gift tax paid by a fraction. Amended tax form The numerator of the fraction is the net increase in value of the gift and the denominator is the amount of the gift. Amended tax form   The net increase in value of the gift is the FMV of the gift minus the donor's adjusted basis. Amended tax form The amount of the gift is its value for gift tax purposes after reduction by any annual exclusion and marital or charitable deduction that applies to the gift. Amended tax form Example. Amended tax form In 2013, you received a gift of property from your mother that had an FMV of $50,000. Amended tax form Her adjusted basis was $20,000. Amended tax form The amount of the gift for gift tax purposes was $36,000 ($50,000 minus the $14,000 annual exclusion). Amended tax form She paid a gift tax of $7,320 on the property. Amended tax form Your basis is $26,076, figured as follows: Fair market value $50,000 Minus: Adjusted basis −20,000 Net increase in value $30,000     Gift tax paid $7,320 Multiplied by ($30,000 ÷ $36,000) × . Amended tax form 83 Gift tax due to net increase in value $6,076 Adjusted basis of property to your mother +20,000 Your basis in the property $26,076 Note. Amended tax form If you received a gift before 1977, your basis in the gift (the donor's adjusted basis) includes any gift tax paid on it. Amended tax form However, your basis cannot exceed the FMV of the gift at the time it was given to you. Amended tax form Inherited Property Your basis in property you inherited from a decedent, who died before January 1, 2010, or after December 31, 2010, is generally one of the following: The FMV of the property at the date of the decedent's death. Amended tax form The FMV on the alternate valuation date if the personal representative for the estate elects to use alternate valuation. Amended tax form The value under the special-use valuation method for real property used in farming or a closely held business if elected for estate tax purposes. Amended tax form The decedent's adjusted basis in land to the extent of the value excluded from the decedent's taxable estate as a qualified conservation easement. Amended tax form If a federal estate tax return does not have to be filed, your basis in the inherited property is its appraised value at the date of death for state inheritance or transmission taxes. Amended tax form For more information, see the instructions to Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Amended tax form Property inherited from a decedent who died in 2010. Amended tax form   If you inherited property from a decedent who died in 2010, special rules may apply. Amended tax form For more information, see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Amended tax form Community property. Amended tax form   In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), husband and wife are each usually considered to own half the community property. Amended tax form When either spouse dies, the total value of the community property, even the part belonging to the surviving spouse, generally becomes the basis of the entire property. Amended tax form For this rule to apply, at least half the value of the community property interest must be includible in the decedent's gross estate, whether or not the estate must file a return. Amended tax form Example. Amended tax form You and your spouse owned community property that had a basis of $80,000. Amended tax form When your spouse died, half the FMV of the community interest was includible in your spouse's estate. Amended tax form The FMV of the community interest was $100,000. Amended tax form The basis of your half of the property after the death of your spouse is $50,000 (half of the $100,000 FMV). Amended tax form The basis of the other half to your spouse's heirs is also $50,000. Amended tax form For more information about community property, see Publication 555, Community Property. Amended tax form Property Changed From Personal to Business or Rental Use If you hold property for personal use and then change it to business use or use it to produce rent, you can begin to depreciate the property at the time of the change. Amended tax form To do so, you must figure its basis for depreciation at the time of the change. Amended tax form An example of changing property held for personal use to business or rental use would be renting out your former personal residence. Amended tax form Basis for depreciation. Amended tax form   The basis for depreciation is the lesser of the following amounts. Amended tax form The FMV of the property on the date of the change. Amended tax form Your adjusted basis on the date of the change. Amended tax form Example. Amended tax form Several years ago, you paid $160,000 to have your house built on a lot that cost $25,000. Amended tax form You paid $20,000 for permanent improvements to the house and claimed a $2,000 casualty loss deduction for damage to the house before changing the property to rental use last year. Amended tax form Because land is not depreciable, you include only the cost of the house when figuring the basis for depreciation. Amended tax form Your adjusted basis in the house when you changed its use was $178,000 ($160,000 + $20,000 − $2,000). Amended tax form On the same date, your property had an FMV of $180,000, of which $15,000 was for the land and $165,000 was for the house. Amended tax form The basis for figuring depreciation on the house is its FMV on the date of the change ($165,000) because it is less than your adjusted basis ($178,000). Amended tax form Sale of property. Amended tax form   If you later sell or dispose of property changed to business or rental use, the basis you use will depend on whether you are figuring gain or loss. Amended tax form Gain. Amended tax form   The basis for figuring a gain is your adjusted basis in the property when you sell the property. Amended tax form Example. Amended tax form Assume the same facts as in the previous example except that you sell the property at a gain after being allowed depreciation deductions of $37,500. Amended tax form Your adjusted basis for figuring gain is $165,500 ($178,000 + $25,000 (land) − $37,500). Amended tax form Loss. Amended tax form   Figure the basis for a loss starting with the smaller of your adjusted basis or the FMV of the property at the time of the change to business or rental use. Amended tax form Then make adjustments (increases and decreases) for the period after the change in the property's use, as discussed earlier under Adjusted Basis . Amended tax form Example. Amended tax form Assume the same facts as in the previous example, except that you sell the property at a loss after being allowed depreciation deductions of $37,500. Amended tax form In this case, you would start with the FMV on the date of the change to rental use ($180,000), because it is less than the adjusted basis of $203,000 ($178,000 + $25,000 (land)) on that date. Amended tax form Reduce that amount ($180,000) by the depreciation deductions ($37,500). Amended tax form The basis for loss is $142,500 ($180,000 − $37,500). Amended tax form Stocks and Bonds The basis of stocks or bonds you buy generally is the purchase price plus any costs of purchase, such as commissions and recording or transfer fees. Amended tax form If you get stocks or bonds other than by purchase, your basis is usually determined by the FMV or the previous owner's adjusted basis, as discussed earlier. Amended tax form You must adjust the basis of stocks for certain events that occur after purchase. Amended tax form For example, if you receive additional stock from nontaxable stock dividends or stock splits, reduce your basis for each share of stock by dividing the adjusted basis of the old stock by the number of shares of old and new stock. Amended tax form This rule applies only when the additional stock received is identical to the stock held. Amended tax form Also reduce your basis when you receive nontaxable distributions. Amended tax form They are a return of capital. Amended tax form Example. Amended tax form In 2011 you bought 100 shares of XYZ stock for $1,000 or $10 a share. Amended tax form In 2012 you bought 100 shares of XYZ stock for $1,600 or $16 a share. Amended tax form In 2013 XYZ declared a 2-for-1 stock split. Amended tax form You now have 200 shares of stock with a basis of $5 a share and 200 shares with a basis of $8 a share. Amended tax form Other basis. Amended tax form   There are other ways to figure the basis of stocks or bonds depending on how you acquired them. Amended tax form For detailed information, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Amended tax form Identifying stocks or bonds sold. Amended tax form   If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stocks or bonds. Amended tax form If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. Amended tax form For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550. Amended tax form Mutual fund shares. Amended tax form   If you sell mutual fund shares you acquired at various times and prices and left on deposit in an account kept by a custodian or agent, you can elect to use an average basis. Amended tax form For more information, see Publication 550. Amended tax form Bond premium. Amended tax form   If you buy a taxable bond at a premium and elect to amortize the premium, reduce the basis of the bond by the amortized premium you deduct each year. Amended tax form See Bond Premium Amortization in chapter 3 of Publication 550 for more information. Amended tax form Although you cannot deduct the premium on a tax-exempt bond, you must amortize the premium each year and reduce your basis in the bond by the amortized amount. Amended tax form Original issue discount (OID) on debt instruments. Amended tax form   You must increase your basis in an OID debt instrument by the OID you include in income for that instrument. Amended tax form See Original Issue Discount (OID) in chapter 7 and Publication 1212, Guide To Original Issue Discount (OID) Instruments. Amended tax form Tax-exempt obligations. Amended tax form    OID on tax-exempt obligations is generally not taxable. Amended tax form However, when you dispose of a tax-exempt obligation issued after September 3, 1982, and acquired after March 1, 1984, you must accrue OID on the obligation to determine its adjusted basis. Amended tax form The accrued OID is added to the basis of the obligation to determine your gain or loss. Amended tax form See chapter 4 of Publication 550. Amended tax form Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Statistics by Form

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Find your specific topic by using these selected IRS form numbers and titles.


 

Form Number  

   Form Title

706

United States Estate (and Generation-Skipping Transfer) Tax Return 

706NA

United States Estate (and Generation-Skipping Transfer) Tax Return: Estate of Nonresident Not a Citizen of the United States

709

United States Gift (and Generation-Skipping Transfer) Tax Return

720

Quarterly Federal Excise Tax Return

940

Employer's Annual Federal Unemployment (FUTA) Tax Return

990

Return of Organization Exempt from Income Tax

990-PF

Return of Private Foundation

990-T

Exempt Organization Business Income Tax Return

1040

U.S. Individual Income Tax Return

1040, Schedule C

U.S. Individual Income Tax Return: Profit or Loss from Business

1040, Schedule F

U.S. Individual Income Tax Return: Profit or Loss from Farming

1041

U.S. Income Tax Return for Estates and Trusts

1042-S

Foreign Person's U.S. Source Income Subject to Withholding

1065

U.S. Partnership Return of Income

1116

Foreign Tax Credit: Individuals

1118

Foreign Tax Credit: Corporations

1120

U.S. Corporation Income Tax Return

1120-F

U.S. Income Tax Return of a Foreign Corporation

1120-FSC

U.S. Income Tax Return of a Foreign Sales Corporation

1120S

U.S. Income Tax Return for an S Corporation

2555

Foreign Earned Income: U.S. Citizens

3520

Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts

5227

Split-Interest Trust Information Return

5471

Information Return of U.S. Person with Respect to Certain Foreign Corporations

5472

Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

5500

Annual Return / Report of Employee Benefits Plan

5713

International Boycott Report

5735

Possessions Corporation Tax Credit under Sections 936 and 30A

8038

Information Return for Tax-Exempt Private Activity Bond Issues

8805

Foreign Partner's Information Statement of Section 1446 Withholding Tax

  


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Page Last Reviewed or Updated: 29-Jan-2014

The Amended Tax Form

Amended tax form Publication 526 - Main Content Table of Contents Organizations That Qualify To Receive Deductible ContributionsTypes of Qualified Organizations Contributions You Can DeductContributions From Which You Benefit Expenses Paid for Student Living With You Out-of-Pocket Expenses in Giving Services Expenses of Whaling Captains Contributions You Cannot DeductContributions to Individuals Contributions to Nonqualified Organizations Contributions From Which You Benefit Value of Time or Services Personal Expenses Appraisal Fees Contributions to Donor-Advised Funds Partial Interest in Property Contributions of PropertyContributions Subject to Special Rules Determining Fair Market Value Giving Property That Has Decreased in Value Giving Property That Has Increased in Value Penalty When To DeductChecks. Amended tax form Text message. Amended tax form Credit card. Amended tax form Pay-by-phone account. Amended tax form Stock certificate. Amended tax form Promissory note. Amended tax form Option. Amended tax form Borrowed funds. Amended tax form Conditional gift. Amended tax form Limits on Deductions50% Limit 30% Limit Special 30% Limit for Capital Gain Property 20% Limit Special 50% Limit for Qualified Conservation Contributions How To Figure Your Deduction When Limits Apply Records To KeepCash Contributions Noncash Contributions Out-of-Pocket Expenses How To ReportReporting expenses for student living with you. Amended tax form Total deduction over $500. Amended tax form Deduction over $5,000 for one item. Amended tax form Vehicle donations. Amended tax form Clothing and household items not in good used condition. Amended tax form Easement on building in historic district. Amended tax form Deduction over $500,000. Amended tax form How To Get Tax HelpLow Income Taxpayer Clinics Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. Amended tax form Most organizations, other than churches and governments, must apply to the IRS to become a qualified organization. Amended tax form How to check whether an organization can receive deductible charitable contributions. Amended tax form   You can ask any organization whether it is a qualified organization, and most will be able to tell you. Amended tax form Or go to IRS. Amended tax form gov. Amended tax form Click on “Tools” and then on “Exempt Organizations Select Check” (www. Amended tax form irs. Amended tax form gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check). Amended tax form This online tool will enable you to search for qualified organizations. Amended tax form You can also call the IRS to find out if an organization is qualified. Amended tax form Call 1-877-829-5500. Amended tax form People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 1-800-829-4059. Amended tax form Deaf or hard of hearing individuals can also contact the IRS through relay services such as the Federal Relay Service at www. Amended tax form gsa. Amended tax form gov/fedrelay. Amended tax form Types of Qualified Organizations Generally, only the following types of organizations can be qualified organizations. Amended tax form A community chest, corporation, trust, fund, or foundation organized or created in or under the laws of the United States, any state, the District of Columbia, or any possession of the United States (including Puerto Rico). Amended tax form It must, however, be organized and operated only for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Amended tax form Certain organizations that foster national or international amateur sports competition also qualify. Amended tax form War veterans' organizations, including posts, auxiliaries, trusts, or foundations, organized in the United States or any of its possessions (including Puerto Rico). Amended tax form Domestic fraternal societies, orders, and associations operating under the lodge system. Amended tax form (Your contribution to this type of organization is deductible only if it is to be used solely for charitable, religious, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals. Amended tax form ) Certain nonprofit cemetery companies or corporations. Amended tax form (Your contribution to this type of organization is not deductible if it can be used for the care of a specific lot or mausoleum crypt. Amended tax form ) The United States or any state, the District of Columbia, a U. Amended tax form S. Amended tax form possession (including Puerto Rico), a political subdivision of a state or U. Amended tax form S. Amended tax form possession, or an Indian tribal government or any of its subdivisions that perform substantial government functions. Amended tax form (Your contribution to this type of organization is deductible only if it is to be used solely for public purposes. Amended tax form ) Example 1. Amended tax form You contribute cash to your city's police department to be used as a reward for information about a crime. Amended tax form The city police department is a qualified organization, and your contribution is for a public purpose. Amended tax form You can deduct your contribution. Amended tax form Example 2. Amended tax form You make a voluntary contribution to the social security trust fund, not earmarked for a specific account. Amended tax form Because the trust fund is part of the U. Amended tax form S. Amended tax form Government, you contributed to a qualified organization. Amended tax form You can deduct your contribution. Amended tax form Examples. Amended tax form   The following list gives some examples of qualified organizations. Amended tax form Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations. Amended tax form Most nonprofit charitable organizations such as the American Red Cross and the United Way. Amended tax form Most nonprofit educational organizations, including the Boy Scouts of America, Girl Scouts of America, colleges, and museums. Amended tax form This also includes nonprofit daycare centers that provide childcare to the general public if substantially all the childcare is provided to enable parents and guardians to be gainfully employed. Amended tax form However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct . Amended tax form Nonprofit hospitals and medical research organizations. Amended tax form Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs. Amended tax form Nonprofit volunteer fire companies. Amended tax form Nonprofit organizations that develop and maintain public parks and recreation facilities. Amended tax form Civil defense organizations. Amended tax form Canadian charities. Amended tax form   You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. Amended tax form To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. Amended tax form See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction. Amended tax form Mexican charities. Amended tax form   Under the U. Amended tax form S. Amended tax form -Mexico income tax treaty, a contribution to a Mexican charitable organization may be deductible, but only if and to the extent the contribution would have been treated as a charitable contribution to a public charity created or organized under U. Amended tax form S. Amended tax form law. Amended tax form To deduct your contribution to a Mexican charity, you must have income from sources in Mexico. Amended tax form The limits described in Limits on Deductions , later, apply and are figured using your income from Mexican sources. Amended tax form Israeli charities. Amended tax form   Under the U. Amended tax form S. Amended tax form -Israel income tax treaty, a contribution to an Israeli charitable organization is deductible if and to the extent the contribution would have been treated as a charitable contribution if the organization had been created or organized under U. Amended tax form S. Amended tax form law. Amended tax form To deduct your contribution to an Israeli charity, you must have income from sources in Israel. Amended tax form The limits described in Limits on Deductions , later, apply. Amended tax form The deduction is also limited to 25% of your adjusted gross income from Israeli sources. Amended tax form Contributions You Can Deduct Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. Amended tax form A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Amended tax form The contributions must be made to a qualified organization and not set aside for use by a specific person. Amended tax form If you give property to a qualified organization, you generally can deduct the fair market value of the property at the time of the contribution. Amended tax form See Contributions of Property , later. Amended tax form Your deduction for charitable contributions generally cannot be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. Amended tax form In addition, the total of your charitable contributions deduction and certain other itemized deductions may be limited. Amended tax form See Limits on Deductions , later. Amended tax form Table 1 in this publication gives examples of contributions you can and cannot deduct. Amended tax form Contributions From Which You Benefit If you receive a benefit as a result of making a contribution to a qualified organization, you can deduct only the amount of your contribution that is more than the value of the benefit you receive. Amended tax form Also see Contributions From Which You Benefit under Contributions You Cannot Deduct, later. Amended tax form If you pay more than fair market value to a qualified organization for goods or services, the excess may be a charitable contribution. Amended tax form For the excess amount to qualify, you must pay it with the intent to make a charitable contribution. Amended tax form Example 1. Amended tax form You pay $65 for a ticket to a dinner-dance at a church. Amended tax form Your entire $65 payment goes to the church. Amended tax form The ticket to the dinner-dance has a fair market value of $25. Amended tax form When you buy your ticket, you know its value is less than your payment. Amended tax form To figure the amount of your charitable contribution, subtract the value of the benefit you receive ($25) from your total payment ($65). Amended tax form You can deduct $40 as a charitable contribution to the church. Amended tax form Example 2. Amended tax form At a fundraising auction conducted by a charity, you pay $600 for a week's stay at a beach house. Amended tax form The amount you pay is no more than the fair rental value. Amended tax form You have not made a deductible charitable contribution. Amended tax form Athletic events. Amended tax form   If you make a payment to, or for the benefit of, a college or university and, as a result, you receive the right to buy tickets to an athletic event in the athletic stadium of the college or university, you can deduct 80% of the payment as a charitable contribution. Amended tax form   If any part of your payment is for tickets (rather than the right to buy tickets), that part is not deductible. Amended tax form Subtract the price of the tickets from your payment. Amended tax form You can deduct 80% of the remaining amount as a charitable contribution. Amended tax form Example 1. Amended tax form You pay $300 a year for membership in a university's athletic scholarship program. Amended tax form The only benefit of membership is that you have the right to buy one season ticket for a seat in a designated area of the stadium at the university's home football games. Amended tax form You can deduct $240 (80% of $300) as a charitable contribution. Amended tax form Example 2. Amended tax form The facts are the same as in Example 1 except your $300 payment includes the purchase of one season ticket for the stated ticket price of $120. Amended tax form You must subtract the usual price of a ticket ($120) from your $300 payment. Amended tax form The result is $180. Amended tax form Your deductible charitable contribution is $144 (80% of $180). Amended tax form Charity benefit events. Amended tax form   If you pay a qualified organization more than fair market value for the right to attend a charity ball, banquet, show, sporting event, or other benefit event, you can deduct only the amount that is more than the value of the privileges or other benefits you receive. Amended tax form   If there is an established charge for the event, that charge is the value of your benefit. Amended tax form If there is no established charge, the reasonable value of the right to attend the event is the value of your benefit. Amended tax form Whether you use the tickets or other privileges has no effect on the amount you can deduct. Amended tax form However, if you return the ticket to the qualified organization for resale, you can deduct the entire amount you paid for the ticket. Amended tax form    Even if the ticket or other evidence of payment indicates that the payment is a “contribution,” this does not mean you can deduct the entire amount. Amended tax form If the ticket shows the price of admission and the amount of the contribution, you can deduct the contribution amount. Amended tax form Example. Amended tax form You pay $40 to see a special showing of a movie for the benefit of a qualified organization. Amended tax form Printed on the ticket is “Contribution–$40. Amended tax form ” If the regular price for the movie is $8, your contribution is $32 ($40 payment − $8 regular price). Amended tax form Membership fees or dues. Amended tax form   You may be able to deduct membership fees or dues you pay to a qualified organization. Amended tax form However, you can deduct only the amount that is more than the value of the benefits you receive. Amended tax form   You cannot deduct dues, fees, or assessments paid to country clubs and other social organizations. Amended tax form They are not qualified organizations. Amended tax form Certain membership benefits can be disregarded. Amended tax form   Both you and the organization can disregard the following membership benefits if you get them in return for an annual payment of $75 or less. Amended tax form Any rights or privileges, other than those discussed under Athletic events , earlier, that you can use frequently while you are a member, such as: Free or discounted admission to the organization's facilities or events, Free or discounted parking, Preferred access to goods or services, and Discounts on the purchase of goods and services. Amended tax form Admission, while you are a member, to events open only to members of the organization if the organization reasonably projects that the cost per person (excluding any allocated overhead) is not more than $10. Amended tax form 20. Amended tax form Token items. Amended tax form   You do not have to reduce your contribution by the value of any benefit you receive if both of the following are true. Amended tax form You receive only a small item or other benefit of token value. Amended tax form The qualified organization correctly determines that the value of the item or benefit you received is not substantial and informs you that you can deduct your payment in full. Amended tax form The organization determines whether the value of an item or benefit is substantial by using Revenue Procedures 90-12 and 92-49 and the inflation adjustment in Revenue Procedure 2012–41. Amended tax form Written statement. Amended tax form   A qualified organization must give you a written statement if you make a payment of more than $75 that is partly a contribution and partly for goods or services. Amended tax form The statement must say you can deduct only the amount of your payment that is more than the value of the goods or services you received. Amended tax form It must also give you a good faith estimate of the value of those goods or services. Amended tax form   The organization can give you the statement either when it solicits or when it receives the payment from you. Amended tax form Exception. Amended tax form   An organization will not have to give you this statement if one of the following is true. Amended tax form The organization is: A governmental organization described in (5) under Types of Qualified Organizations , earlier, or An organization formed only for religious purposes, and the only benefit you receive is an intangible religious benefit (such as admission to a religious ceremony) that generally is not sold in commercial transactions outside the donative context. Amended tax form You receive only items whose value is not substantial as described under Token items , earlier. Amended tax form You receive only membership benefits that can be disregarded, as described under Membership fees or dues , earlier. Amended tax form Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. Amended tax form You can deduct qualifying expenses for a foreign or American student who: Lives in your home under a written agreement between you and a qualified organization (defined later) as part of a program of the organization to provide educational opportunities for the student, Is not your relative (defined later) or dependent (also defined later), and Is a full-time student in the twelfth or any lower grade at a school in the United States. Amended tax form You can deduct up to $50 a month for each full calendar month the student lives with you. Amended tax form Any month when conditions (1) through (3) above are met for 15 or more days counts as a full month. Amended tax form Qualified organization. Amended tax form   For these purposes, a qualified organization can be any of the organizations described earlier under Types of Qualified Organizations , except those in (4) and (5). Amended tax form For example, if you are providing a home for a student as part of a state or local government program, you cannot deduct your expenses as charitable contributions. Amended tax form But see Foster parents under Out-of-Pocket Expenses in Giving Services, later, if you provide the home as a foster parent. Amended tax form Relative. Amended tax form   The term “relative” means any of the following persons. Amended tax form Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). Amended tax form A legally adopted child is considered your child. Amended tax form Your brother, sister, half brother, half sister, stepbrother, or stepsister. Amended tax form Your father, mother, grandparent, or other direct ancestor. Amended tax form Your stepfather or stepmother. Amended tax form A son or daughter of your brother or sister. Amended tax form A brother or sister of your father or mother. Amended tax form Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. Amended tax form Dependent. Amended tax form   For this purpose, the term “dependent” means: A person you can claim as a dependent, or A person you could have claimed as a dependent except that: He or she received gross income of $3,900 or more, He or she filed a joint return, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Amended tax form    Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. Amended tax form S. Amended tax form residents and cannot be claimed as dependents. Amended tax form Qualifying expenses. Amended tax form   You may be able to deduct the cost of books, tuition, food, clothing, transportation, medical and dental care, entertainment, and other amounts you actually spend for the well-being of the student. Amended tax form Expenses that do not qualify. Amended tax form   You cannot deduct depreciation on your home, the fair market value of lodging, and similar items not considered amounts actually spent by you. Amended tax form Nor can you deduct general household expenses, such as taxes, insurance, and repairs. Amended tax form Reimbursed expenses. Amended tax form   In most cases, you cannot claim a charitable contribution deduction if you are compensated or reimbursed for any part of the costs of having a student live with you. Amended tax form However, you may be able to claim a charitable contribution deduction for the unreimbursed portion of your expenses if you are reimbursed only for an extraordinary or one-time item, such as a hospital bill or vacation trip, you paid in advance at the request of the student's parents or the sponsoring organization. Amended tax form Mutual exchange program. Amended tax form   You cannot deduct the costs of a foreign student living in your home under a mutual exchange program through which your child will live with a family in a foreign country. Amended tax form Reporting expenses. Amended tax form   For a list of what you must file with your return if you deduct expenses for a student living with you, see Reporting expenses for student living with you under How To Report, later. Amended tax form Out-of-Pocket Expenses in Giving Services Table 2. Amended tax form Volunteers' Questions and Answers If you volunteer for a qualified organization, the following questions and answers may apply to you. Amended tax form All of the rules explained in this publication also apply. Amended tax form See, in particular, Out-of-Pocket Expenses in Giving Services . Amended tax form Question Answer I volunteer 6 hours a week in the office of a qualified organization. Amended tax form The receptionist is paid $10 an hour for the same work. Amended tax form Can I deduct $60 a week for my time? No, you cannot deduct the value of your time or services. Amended tax form  The office is 30 miles from my home. Amended tax form Can I deduct any of my car expenses for these trips? Yes, you can deduct the costs of gas and oil that are directly related to getting to and from the place where you volunteer. Amended tax form If you do not want to figure your actual costs, you can deduct 14 cents for each mile. Amended tax form I volunteer as a Red Cross nurse's aide at a hospital. Amended tax form Can I deduct the cost of the uniforms I must wear? Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms are not suitable for everyday use, and you must wear them when volunteering. Amended tax form I pay a babysitter to watch my children while I volunteer for a qualified organization. Amended tax form Can I deduct these costs? No, you cannot deduct payments for childcare expenses as a charitable contribution, even if you would be unable to volunteer without childcare. Amended tax form (If you have childcare expenses so you can work for pay, see Publication 503, Child and Dependent Care Expenses. Amended tax form ) Although you cannot deduct the value of your services given to a qualified organization, you may be able to deduct some amounts you pay in giving services to a qualified organization. Amended tax form The amounts must be: Unreimbursed, Directly connected with the services, Expenses you had only because of the services you gave, and Not personal, living, or family expenses. Amended tax form Table 2 contains questions and answers that apply to some individuals who volunteer their services. Amended tax form Underprivileged youths selected by charity. Amended tax form   You can deduct reasonable unreimbursed out-of-pocket expenses you pay to allow underprivileged youths to attend athletic events, movies, or dinners. Amended tax form The youths must be selected by a charitable organization whose goal is to reduce juvenile delinquency. Amended tax form Your own similar expenses in accompanying the youths are not deductible. Amended tax form Conventions. Amended tax form   If a qualified organization selects you to attend a convention as its representative, you can deduct your unreimbursed expenses for travel, including reasonable amounts for meals and lodging, while away from home overnight for the convention. Amended tax form However, see Travel , later. Amended tax form   You cannot deduct personal expenses for sightseeing, fishing parties, theater tickets, or nightclubs. Amended tax form You also cannot deduct travel, meals and lodging, and other expenses for your spouse or children. Amended tax form   You cannot deduct your travel expenses in attending a church convention if you go only as a member of your church rather than as a chosen representative. Amended tax form You can, however, deduct unreimbursed expenses that are directly connected with giving services for your church during the convention. Amended tax form Uniforms. Amended tax form   You can deduct the cost and upkeep of uniforms that are not suitable for everyday use and that you must wear while performing donated services for a charitable organization. Amended tax form Foster parents. Amended tax form   You may be able to deduct as a charitable contribution some of the costs of being a foster parent (foster care provider) if you have no profit motive in providing the foster care and are not, in fact, making a profit. Amended tax form A qualified organization must select the individuals you take into your home for foster care. Amended tax form   You can deduct expenses that meet both of the following requirements. Amended tax form They are unreimbursed out-of-pocket expenses to feed, clothe, and care for the foster child. Amended tax form They are incurred primarily to benefit the qualified organization. Amended tax form   Unreimbursed expenses that you cannot deduct as charitable contributions may be considered support provided by you in determining whether you can claim the foster child as a dependent. Amended tax form For details, see Publication 501, Exemptions, Standard Deduction, and Filing Information. Amended tax form Example. Amended tax form You cared for a foster child because you wanted to adopt her, not to benefit the agency that placed her in your home. Amended tax form Your unreimbursed expenses are not deductible as charitable contributions. Amended tax form Church deacon. Amended tax form   You can deduct as a charitable contribution any unreimbursed expenses you have while in a permanent diaconate program established by your church. Amended tax form These expenses include the cost of vestments, books, and transportation required in order to serve in the program as either a deacon candidate or an ordained deacon. Amended tax form Car expenses. Amended tax form   You can deduct as a charitable contribution any unreimbursed out-of-pocket expenses, such as the cost of gas and oil, directly related to the use of your car in giving services to a charitable organization. Amended tax form You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance. Amended tax form   If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution. Amended tax form   You can deduct parking fees and tolls whether you use your actual expenses or the standard mileage rate. Amended tax form   You must keep reliable written records of your car expenses. Amended tax form For more information, see Car expenses under Records To Keep, later. Amended tax form Travel. Amended tax form   Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel. Amended tax form This applies whether you pay the expenses directly or indirectly. Amended tax form You are paying the expenses indirectly if you make a payment to the charitable organization and the organization pays for your travel expenses. Amended tax form   The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization. Amended tax form Even if you enjoy the trip, you can take a charitable contribution deduction for your travel expenses if you are on duty in a genuine and substantial sense throughout the trip. Amended tax form However, if you have only nominal duties, or if for significant parts of the trip you do not have any duties, you cannot deduct your travel expenses. Amended tax form Example 1. Amended tax form You are a troop leader for a tax-exempt youth group and you take the group on a camping trip. Amended tax form You are responsible for overseeing the setup of the camp and for providing adult supervision for other activities during the entire trip. Amended tax form You participate in the activities of the group and enjoy your time with them. Amended tax form You oversee the breaking of camp and you transport the group home. Amended tax form You can deduct your travel expenses. Amended tax form Example 2. Amended tax form You sail from one island to another and spend 8 hours a day counting whales and other forms of marine life. Amended tax form The project is sponsored by a charitable organization. Amended tax form In most circumstances, you cannot deduct your expenses. Amended tax form Example 3. Amended tax form You work for several hours each morning on an archeological dig sponsored by a charitable organization. Amended tax form The rest of the day is free for recreation and sightseeing. Amended tax form You cannot take a charitable contribution deduction even though you work very hard during those few hours. Amended tax form Example 4. Amended tax form You spend the entire day attending a charitable organization's regional meeting as a chosen representative. Amended tax form In the evening you go to the theater. Amended tax form You can claim your travel expenses as charitable contributions, but you cannot claim the cost of your evening at the theater. Amended tax form Daily allowance (per diem). Amended tax form   If you provide services for a charitable organization and receive a daily allowance to cover reasonable travel expenses, including meals and lodging while away from home overnight, you must include in income any part of the allowance that is more than your deductible travel expenses. Amended tax form You may be able to deduct any necessary travel expenses that are more than the allowance. Amended tax form Deductible travel expenses. Amended tax form   These include: Air, rail, and bus transportation, Out-of-pocket expenses for your car, Taxi fares or other costs of transportation between the airport or station and your hotel, Lodging costs, and The cost of meals. Amended tax form Because these travel expenses are not business-related, they are not subject to the same limits as business related expenses. Amended tax form For information on business travel expenses, see Travel in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Amended tax form Expenses of Whaling Captains You may be able to deduct as a charitable contribution any reasonable and necessary whaling expenses you pay during the year to carry out sanctioned whaling activities. Amended tax form The deduction is limited to $10,000 a year. Amended tax form To claim the deduction, you must be recognized by the Alaska Eskimo Whaling Commission as a whaling captain charged with the responsibility of maintaining and carrying out sanctioned whaling activities. Amended tax form Sanctioned whaling activities are subsistence bowhead whale hunting activities conducted under the management plan of the Alaska Eskimo Whaling Commission. Amended tax form Whaling expenses include expenses for: Acquiring and maintaining whaling boats, weapons, and gear used in sanctioned whaling activities, Supplying food for the crew and other provisions for carrying out these activities, and Storing and distributing the catch from these activities. Amended tax form You must keep records showing the time, place, date, amount, and nature of the expenses. Amended tax form For details, see Revenue Procedure 2006-50, which is on page 944 of Internal Revenue Bulletin 2006-47 at www. Amended tax form irs. Amended tax form gov/pub/irs-irbs/irb06-47. Amended tax form pdf. Amended tax form Contributions You Cannot Deduct There are some contributions you cannot deduct and others you can deduct only in part. Amended tax form You cannot deduct as a charitable contribution: A contribution to a specific individual, A contribution to a nonqualified organization, The part of a contribution from which you receive or expect to receive a benefit, The value of your time or services, Your personal expenses, A qualified charitable distribution from an individual retirement arrangement (IRA), Appraisal fees, Certain contributions to donor-advised funds, or Certain contributions of partial interests in property. Amended tax form Detailed discussions of these items follow. Amended tax form Contributions to Individuals You cannot deduct contributions to specific individuals, including the following. Amended tax form Contributions to fraternal societies made for the purpose of paying medical or burial expenses of members. Amended tax form Contributions to individuals who are needy or worthy. Amended tax form You cannot deduct these contributions even if you make them to a qualified organization for the benefit of a specific person. Amended tax form But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you do not indicate that your contribution is for a specific person. Amended tax form Example. Amended tax form You can deduct contributions to a qualified organization for flood relief, hurricane relief, or other disaster relief. Amended tax form However, you cannot deduct contributions earmarked for relief of a particular individual or family. Amended tax form Payments to a member of the clergy that can be spent as he or she wishes, such as for personal expenses. Amended tax form Expenses you paid for another person who provided services to a qualified organization. Amended tax form Example. Amended tax form Your son does missionary work. Amended tax form You pay his expenses. Amended tax form You cannot claim a deduction for your son's unreimbursed expenses related to his contribution of services. Amended tax form Payments to a hospital that are for a specific patient's care or for services for a specific patient. Amended tax form You cannot deduct these payments even if the hospital is operated by a city, state, or other qualified organization. Amended tax form Contributions to Nonqualified Organizations You cannot deduct contributions to organizations that are not qualified to receive tax-deductible contributions, including the following. Amended tax form Certain state bar associations if: The bar is not a political subdivision of a state, The bar has private, as well as public, purposes, such as promoting the professional interests of members, and Your contribution is unrestricted and can be used for private purposes. Amended tax form Chambers of commerce and other business leagues or organizations. Amended tax form Civic leagues and associations. Amended tax form Communist organizations. Amended tax form Country clubs and other social clubs. Amended tax form Foreign organizations other than certain Canadian, Israeli, or Mexican charitable organizations. Amended tax form (See Canadian charities , Mexican charities , and Israeli charities under Organizations That Qualify To Receive Deductible Contributions, earlier. Amended tax form ) Also, you cannot deduct a contribution you made to any qualifying organization if the contribution is earmarked to go to a foreign organization. Amended tax form However, certain contributions to a qualified organization for use in a program conducted by a foreign charity may be deductible as long as they are not earmarked to go to the foreign charity. Amended tax form For the contribution to be deductible, the qualified organization must approve the program as furthering its own exempt purposes and must keep control over the use of the contributed funds. Amended tax form The contribution is also deductible if the foreign charity is only an administrative arm of the qualified organization. Amended tax form Homeowners' associations. Amended tax form Labor unions. Amended tax form But you may be able to deduct union dues as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Amended tax form See Publication 529, Miscellaneous Deductions. Amended tax form Political organizations and candidates. Amended tax form Contributions From Which You Benefit If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you cannot deduct the part of the contribution that represents the value of the benefit you receive. Amended tax form See Contributions From Which You Benefit under Contributions You Can Deduct, earlier. Amended tax form These contributions include the following. Amended tax form Contributions for lobbying. Amended tax form This includes amounts you earmark for use in, or in connection with, influencing specific legislation. Amended tax form Contributions to a retirement home for room, board, maintenance, or admittance. Amended tax form Also, if the amount of your contribution depends on the type or size of apartment you will occupy, it is not a charitable contribution. Amended tax form Costs of raffles, bingo, lottery, etc. Amended tax form You cannot deduct as a charitable contribution amounts you pay to buy raffle or lottery tickets or to play bingo or other games of chance. Amended tax form For information on how to report gambling winnings and losses, see Deductions Not Subject to the 2% Limit in Publication 529. Amended tax form Dues to fraternal orders and similar groups. Amended tax form However, see Membership fees or dues under Contributions From Which You Benefit, earlier. Amended tax form Tuition, or amounts you pay instead of tuition. Amended tax form You cannot deduct as a charitable contribution amounts you pay as tuition even if you pay them for children to attend parochial schools or qualifying nonprofit daycare centers. Amended tax form You also cannot deduct any fixed amount you must pay in addition to, or instead of, tuition to enroll in a private school, even if it is designated as a “donation. Amended tax form ” Contributions connected with split-dollar insurance arrangements. Amended tax form You cannot deduct any part of a contribution to a charitable organization if, in connection with the contribution, the organization directly or indirectly pays, has paid, or is expected to pay any premium on any life insurance, annuity, or endowment contract for which you, any member of your family, or any other person chosen by you (other than a qualified charitable organization) is a beneficiary. Amended tax form Example. Amended tax form You donate money to a charitable organization. Amended tax form The charity uses the money to purchase a cash value life insurance policy. Amended tax form The beneficiaries under the insurance policy include members of your family. Amended tax form Even though the charity may eventually get some benefit out of the insurance policy, you cannot deduct any part of the donation. Amended tax form Qualified Charitable Distributions A qualified charitable distribution (QCD) is a distribution made directly by the trustee of your individual retirement arrangement (IRA), other than a SEP or SIMPLE IRA, to certain qualified organizations. Amended tax form You must have been at least age 70½ when the distribution was made. Amended tax form Your total QCDs for the year cannot be more than $100,000. Amended tax form If all the requirements are met, a QCD is nontaxable, but you cannot claim a charitable contribution deduction for a QCD. Amended tax form See Publication 590, Individual Retirement Arrangements (IRAs), for more information about QCDs. Amended tax form Value of Time or Services You cannot deduct the value of your time or services, including: Blood donations to the American Red Cross or to blood banks, and The value of income lost while you work as an unpaid volunteer for a qualified organization. Amended tax form Personal Expenses You cannot deduct personal, living, or family expenses, such as the following items. Amended tax form The cost of meals you eat while you perform services for a qualified organization, unless it is necessary for you to be away from home overnight while performing the services. Amended tax form Adoption expenses, including fees paid to an adoption agency and the costs of keeping a child in your home before adoption is final. Amended tax form However, you may be able to claim a tax credit for these expenses. Amended tax form Also, you may be able to exclude from your gross income amounts paid or reimbursed by your employer for your adoption expenses. Amended tax form See Form 8839, Qualified Adoption Expenses, and its instructions, for more information. Amended tax form You also may be able to claim an exemption for the child. Amended tax form See Exemptions for Dependents in Publication 501 for more information. Amended tax form Appraisal Fees You cannot deduct as a charitable contribution any fees you pay to find the fair market value of donated property. Amended tax form But you can claim them, subject to the 2%-of-adjusted-gross-income limit, as a miscellaneous itemized deduction on Schedule A (Form 1040). Amended tax form See Deductions Subject to the 2% Limit in Publication 529 for more information. Amended tax form Contributions to Donor-Advised Funds You cannot deduct a contribution to a donor-advised fund if: The qualified organization that sponsors the fund is a war veterans' organization, a fraternal society, or a nonprofit cemetery company, or You do not have an acknowledgment from that sponsoring organization that it has exclusive legal control over the assets contributed. Amended tax form There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Amended tax form Generally, a donor-advised fund is a fund or account in which a donor can, because of being a donor, advise the fund how to distribute or invest amounts held in the fund. Amended tax form For details, see Internal Revenue Code section 170(f)(18). Amended tax form Partial Interest in Property Generally, you cannot deduct a contribution of less than your entire interest in property. Amended tax form For details, see Partial Interest in Property under Contributions of Property, later. Amended tax form Contributions of Property If you contribute property to a qualified organization, the amount of your charitable contribution is generally the fair market value of the property at the time of the contribution. Amended tax form However, if the property has increased in value, you may have to make some adjustments to the amount of your deduction. Amended tax form See Giving Property That Has Increased in Value , later. Amended tax form For information about the records you must keep and the information you must furnish with your return if you donate property, see Records To Keep and How To Report , later. Amended tax form Contributions Subject to Special Rules Special rules apply if you contribute: Clothing or household items, A car, boat, or airplane, Taxidermy property, Property subject to a debt, A partial interest in property, A fractional interest in tangible personal property, A qualified conservation contribution, A future interest in tangible personal property, Inventory from your business, or A patent or other intellectual property. Amended tax form These special rules are described next. Amended tax form Clothing and Household Items You cannot take a deduction for clothing or household items you donate unless the clothing or household items are in good used condition or better. Amended tax form Exception. Amended tax form   You can take a deduction for a contribution of an item of clothing or a household item that is not in good used condition or better if you deduct more than $500 for it and include a qualified appraisal of it with your return. Amended tax form Household items. Amended tax form   Household items include: Furniture and furnishings, Electronics, Appliances, Linens, and Other similar items. Amended tax form   Household items do not include: Food, Paintings, antiques, and other objects of art, Jewelry and gems, and Collections. Amended tax form Fair market value. Amended tax form   To determine the fair market value of these items, use the rules under Determining Fair Market Value , later. Amended tax form Cars, Boats, and Airplanes The following rules apply to any donation of a qualified vehicle. Amended tax form A qualified vehicle is: A car or any motor vehicle manufactured mainly for use on public streets, roads, and highways, A boat, or An airplane. Amended tax form Deduction more than $500. Amended tax form   If you donate a qualified vehicle with a claimed fair market value of more than $500, you can deduct the smaller of: The gross proceeds from the sale of the vehicle by the organization, or The vehicle's fair market value on the date of the contribution. Amended tax form If the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount, as described under Giving Property That Has Increased in Value , later. Amended tax form Form 1098-C. Amended tax form   You must attach to your return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. Amended tax form The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle. Amended tax form   If you e-file your return, you must: Attach Copy B of Form 1098-C to Form 8453, U. Amended tax form S. Amended tax form Individual Income Tax Transmittal for an IRS e-file Return, and mail the forms to the IRS, or Include Copy B of Form 1098-C as a pdf attachment if your software program allows it. Amended tax form   If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Amended tax form    You must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle. Amended tax form But if exception 1 or 2 (described later) applies, you must get Form 1098-C (or other statement) within 30 days of your donation. Amended tax form Filing deadline approaching and still no Form 1098-C. Amended tax form   If the filing deadline is approaching and you still do not have a Form 1098-C, you have two choices. Amended tax form Request an automatic 6-month extension of time to file your return. Amended tax form You can get this extension by filing Form 4868, Application for Automatic Extension of Time To File U. Amended tax form S. Amended tax form Individual Income Tax Return. Amended tax form For more information, see the instructions for Form 4868. Amended tax form File the return on time without claiming the deduction for the qualified vehicle. Amended tax form After receiving the Form 1098-C, file an amended return, Form 1040X, Amended U. Amended tax form S. Amended tax form Individual Income Tax Return, claiming the deduction. Amended tax form Attach Copy B of Form 1098-C (or other statement) to the amended return. Amended tax form Exceptions. Amended tax form   There are two exceptions to the rules just described for deductions of more than $500. Amended tax form Exception 1—vehicle used or improved by organization. Amended tax form   If the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, you generally can deduct the vehicle's fair market value at the time of the contribution. Amended tax form But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Amended tax form The Form 1098-C (or other statement) will show whether this exception applies. Amended tax form    Exception 2—vehicle given or sold to needy individual. Amended tax form   If the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization's charitable purpose, you generally can deduct the vehicle's fair market value at the time of the contribution. Amended tax form But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Amended tax form The Form 1098-C (or other statement) will show whether this exception applies. Amended tax form   This exception does not apply if the organization sells the vehicle at auction. Amended tax form In that case, you cannot deduct the vehicle's fair market value. Amended tax form Example. Amended tax form Anita donates a used car to a qualified organization. Amended tax form She bought it 3 years ago for $9,000. Amended tax form A used car guide shows the fair market value for this type of car is $6,000. Amended tax form However, Anita gets a Form 1098-C from the organization showing the car was sold for $2,900. Amended tax form Neither exception 1 nor exception 2 applies. Amended tax form If Anita itemizes her deductions, she can deduct $2,900 for her donation. Amended tax form She must attach Form 1098-C and Form 8283 to her return. Amended tax form Deduction $500 or less. Amended tax form   If the qualified organization sells the vehicle for $500 or less and exceptions 1 and 2 do not apply, you can deduct the smaller of: $500, or The vehicle's fair market value on the date of the contribution. Amended tax form But if the vehicle's fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount, as described under Giving Property That Has Increased in Value , later. Amended tax form   If the vehicle's fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. Amended tax form The statement must contain the information and meet the tests for an acknowledgment described under Contributions of $250 or More under Records To Keep, later. Amended tax form Fair market value. Amended tax form   To determine a vehicle's fair market value, use the rules described under Determining Fair Market Value , later. Amended tax form Donations of inventory. Amended tax form   The vehicle donation rules just described do not apply to donations of inventory. Amended tax form For example, these rules do not apply if you are a car dealer who donates a car you had been holding for sale to customers. Amended tax form See Inventory , later. Amended tax form Taxidermy Property If you donate taxidermy property to a qualified organization, your deduction is limited to your basis in the property or its fair market value, whichever is less. Amended tax form This applies if you prepared, stuffed, or mounted the property or paid or incurred the cost of preparing, stuffing, or mounting the property. Amended tax form Your basis for this purpose includes only the cost of preparing, stuffing, and mounting the property. Amended tax form Your basis does not include transportation or travel costs. Amended tax form It also does not include the direct or indirect costs for hunting or killing an animal, such as equipment costs. Amended tax form In addition, it does not include the value of your time. Amended tax form Taxidermy property means any work of art that: Is the reproduction or preservation of an animal, in whole or in part, Is prepared, stuffed, or mounted to recreate one or more characteristics of the animal, and Contains a part of the body of the dead animal. Amended tax form Property Subject to a Debt If you contribute property subject to a debt (such as a mortgage), you must reduce the fair market value of the property by: Any allowable deduction for interest you paid (or will pay) that is attributable to any period after the contribution, and If the property is a bond, the lesser of: Any allowable deduction for interest you paid (or will pay) to buy or carry the bond that is attributable to any period before the contribution, or The interest, including bond discount, receivable on the bond that is attributable to any period before the contribution, and that is not includible in your income due to your accounting method. Amended tax form This prevents you from deducting the same amount as both investment interest and a charitable contribution. Amended tax form If the recipient (or another person) assumes the debt, you must also reduce the fair market value of the property by the amount of the outstanding debt assumed. Amended tax form The amount of the debt is also treated as an amount realized on the sale or exchange of property for purposes of figuring your taxable gain (if any). Amended tax form For more information, see Bargain Sales under Giving Property That Has Increased in Value, later. Amended tax form Partial Interest in Property Generally, you cannot deduct a charitable contribution of less than your entire interest in property. Amended tax form Right to use property. Amended tax form   A contribution of the right to use property is a contribution of less than your entire interest in that property and is not deductible. Amended tax form Example 1. Amended tax form You own a 10-story office building and donate rent-free use of the top floor to a charitable organization. Amended tax form Because you still own the building, you have contributed a partial interest in the property and cannot take a deduction for the contribution. Amended tax form Example 2. Amended tax form Mandy White owns a vacation home at the beach that she sometimes rents to others. Amended tax form For a fund-raising auction at her church, she donated the right to use the vacation home for 1 week. Amended tax form At the auction, the church received and accepted a bid from Lauren Green equal to the fair rental value of the home for 1 week. Amended tax form Mandy cannot claim a deduction because of the partial interest rule. Amended tax form Lauren cannot claim a deduction either, because she received a benefit equal to the amount of her payment. Amended tax form See Contributions From Which You Benefit , earlier. Amended tax form Exceptions. Amended tax form   You can deduct a charitable contribution of a partial interest in property only if that interest represents one of the following items. Amended tax form A remainder interest in your personal home or farm. Amended tax form A remainder interest is one that passes to a beneficiary after the end of an earlier interest in the property. Amended tax form Example. Amended tax form You keep the right to live in your home during your lifetime and give your church a remainder interest that begins upon your death. Amended tax form You can deduct the value of the remainder interest. Amended tax form An undivided part of your entire interest. Amended tax form This must consist of a part of every substantial interest or right you own in the property and must last as long as your interest in the property lasts. Amended tax form But see Fractional Interest in Tangible Personal Property , later. Amended tax form Example. Amended tax form You contribute voting stock to a qualified organization but keep the right to vote the stock. Amended tax form The right to vote is a substantial right in the stock. Amended tax form You have not contributed an undivided part of your entire interest and cannot deduct your contribution. Amended tax form A partial interest that would be deductible if transferred to certain types of trusts. Amended tax form A qualified conservation contribution (defined later). Amended tax form For information about how to figure the value of a contribution of a partial interest in property, see Partial Interest in Property Not in Trust in Publication 561. Amended tax form Fractional Interest in Tangible Personal Property You cannot deduct a charitable contribution of a fractional interest in tangible personal property unless all interests in the property are held immediately before the contribution by: You, or You and the qualifying organization receiving the contribution. Amended tax form If you make an additional contribution later, the fair market value of that contribution will be determined by using the smaller of: The fair market value of the property at the time of the initial contribution, or The fair market value of the property at the time of the additional contribution. Amended tax form Tangible personal property is defined later under Future Interest in Tangible Personal Property . Amended tax form A fractional interest in property is an undivided portion of your entire interest in the property. Amended tax form Example. Amended tax form An undivided one-quarter interest in a painting that entitles an art museum to possession of the painting for 3 months of each year is a fractional interest in the property. Amended tax form Recapture of deduction. Amended tax form   You must recapture your charitable contribution deduction by including it in your income if both of the following statements are true. Amended tax form You contributed a fractional interest in tangible personal property after August 17, 2006. Amended tax form You do not contribute the rest of your interests in the property to the original recipient or, if it no longer exists, another qualified organization on or before the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Amended tax form   Recapture is also required if the qualified organization has not taken substantial physical possession of the property and used it in a way related to the organization's purpose during the period beginning on the date of the initial contribution and ending on the earlier of: The date that is 10 years after the date of the initial contribution, or The date of your death. Amended tax form Additional tax. Amended tax form   If you must recapture your deduction, you must also pay interest and an additional tax equal to 10% of the amount recaptured. Amended tax form 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. Amended tax form Qualified organization. Amended tax form   For purposes of a qualified conservation contribution, a qualified organization is: A governmental unit, A publicly supported charity, or An organization controlled by, and operated for the exclusive benefit of, a governmental unit or a publicly supported charity. Amended tax form The organization also must have a commitment to protect the conservation purposes of the donation and must have the resources to enforce the restrictions. Amended tax form   A publicly supported charity is an organization of the type described in (1) under Types of Qualified Organizations , earlier, that normally receives a substantial part of its support, other than income from its exempt activities, from direct or indirect contributions from the general public or from governmental units. Amended tax form Qualified real property interest. Amended tax form   This is any of the following interests in real property. Amended tax form 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). Amended tax form A remainder interest. Amended tax form A restriction (granted in perpetuity) on the use that may be made of the real property. Amended tax form Conservation purposes. Amended tax form   Your contribution must be made only for one of the following conservation purposes. Amended tax form Preserving land areas for outdoor recreation by, or for the education of, the general public. Amended tax form Protecting a relatively natural habitat of fish, wildlife, or plants, or a similar ecosystem. Amended tax form Preserving open space, including farmland and forest land, if it yields a significant public benefit. Amended tax form The open space must be preserved either for the scenic enjoyment of the general public or under a clearly defined federal, state, or local governmental conservation policy. Amended tax form Preserving a historically important land area or a certified historic structure. Amended tax form Building in registered historic district. Amended tax form   If a building in a registered historic district is a certified historic structure, a contribution of a qualified real property interest that is an easement or other restriction on the exterior of the building is deductible only if it meets all of the following conditions. Amended tax form The restriction must preserve the entire exterior of the building (including its front, sides, rear, and height) and must prohibit any change to the exterior of the building that is inconsistent with its historical character. Amended tax form You and the organization receiving the contribution must enter into a written agreement certifying, under penalty of perjury, that the organization: Is a qualified organization with a purpose of environmental protection, land conservation, open space preservation, or historic preservation, and Has the resources to manage and enforce the restriction and a commitment to do so. Amended tax form 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. Amended tax form   If you claimed the rehabilitation credit for the building for any of the 5 years before the year of the contribution, your charitable deduction is reduced. Amended tax form For more information, see Form 3468, Investment Credit, and Internal Revenue Code section 170(f)(14). Amended tax form   If you claim a deduction of more than $10,000, your deduction will not be allowed unless you pay a $500 filing fee. Amended tax form See Form 8283-V, Payment Voucher for Filing Fee Under Section 170(f)(13), and its instructions. Amended tax form You may be able to deduct the filing fee as a miscellaneous itemized deduction, subject to the 2%-of-adjusted-gross-income limit, on Schedule A (Form 1040). Amended tax form See Deductions Subject to the 2% Limit in Publication 529 for more information. Amended tax form More information. Amended tax form   For information about determining the fair market value of qualified conservation contributions, see Publication 561. Amended tax form For information about the limits that apply to deductions for this type of contribution, see Limits on Deductions , later. Amended tax form For more information about qualified conservation contributions, see Regulations section 1. Amended tax form 170A-14. Amended tax form Future Interest in Tangible Personal Property You cannot deduct the value of a charitable contribution of a future interest in tangible personal property until all intervening interests in and rights to the actual possession or enjoyment of the property have either expired or been turned over to someone other than yourself, a related person, or a related organization. Amended tax form But see Fractional Interest in Tangible Personal Property , earlier, and Tangible personal property put to unrelated use , later. Amended tax form Related persons include your spouse, children, grandchildren, brothers, sisters, and parents. Amended tax form Related organizations may include a partnership or corporation in which you have an interest, or an estate or trust with which you have a connection. Amended tax form Tangible personal property. Amended tax form   This is any property, other than land or buildings, that can be seen or touched. Amended tax form It includes furniture, books, jewelry, paintings, and cars. Amended tax form Future interest. Amended tax form   This is any interest that is to begin at some future time, regardless of whether it is designated as a future interest under state law. Amended tax form Example. Amended tax form You own an antique car that you contribute to a museum. Amended tax form You give up ownership, but retain the right to keep the car in your garage with your personal collection. Amended tax form Because you keep an interest in the property, you cannot deduct the contribution. Amended tax form If you turn the car over to the museum in a later year, giving up all rights to its use, possession, and enjoyment, you can take a deduction for the contribution in that later year. Amended tax form Inventory If you contribute inventory (property you sell in the course of your business), the amount you can deduct is the smaller of its fair market value on the day you contributed it or its basis. Amended tax form The basis of contributed inventory is any cost incurred for the inventory in an earlier year that you would otherwise include in your opening inventory for the year of the contribution. Amended tax form You must remove the amount of your charitable contribution deduction from your opening inventory. Amended tax form It is not part of the cost of goods sold. Amended tax form If the cost of donated inventory is not included in your opening inventory, the inventory's basis is zero and you cannot claim a charitable contribution deduction. Amended tax form Treat the inventory's cost as you would ordinarily treat it under your method of accounting. Amended tax form For example, include the purchase price of inventory bought and donated in the same year in the cost of goods sold for that year. Amended tax form A special rule applies to certain donations of food inventory. Amended tax form See Food Inventory, later. Amended tax form Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is smaller. Amended tax form Intellectual property means any of the following: Patents. Amended tax form Copyrights (other than a copyright described in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). Amended tax form Trademarks. Amended tax form Trade names. Amended tax form Trade secrets. Amended tax form Know-how. Amended tax form Software (other than software described in Internal Revenue Code section 197(e)(3)(A)(i)). Amended tax form Other similar property or applications or registrations of such property. Amended tax form Additional deduction based on income. Amended tax form   You may be able to claim additional charitable contribution deductions in the year of the contribution and years following, based on the income, if any, from the donated property. Amended tax form   The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. Amended tax form In the table, “tax year 1,” for example, means your first tax year ending on or after the date of the contribution. Amended tax form However, you can take the additional deduction only to the extent the total of the amounts figured using this table is more than the amount of the deduction claimed for the original donation of the property. Amended tax form   After the legal life of the intellectual property ends, or after the 10th anniversary of the donation, whichever is earlier, no additional deduction is allowed. Amended tax form The additional deductions cannot be taken for intellectual property donated to certain private foundations. Amended tax form Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. Amended tax form   You must inform the organization at the time of the donation that you intend to treat the donation as a contribution subject to the provisions just discussed. Amended tax form   The organization is required to file an information return showing the income from the property, with a copy to you. Amended tax form This is done on Form 8899, Notice of Income From Donated Intellectual Property. Amended tax form Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Amended tax form Publication 561 contains a more complete discussion. Amended tax form Fair market value is the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Amended tax form Used clothing. Amended tax form   The fair market value of used clothing and other personal items is usually far less than the price you paid for them. Amended tax form There are no fixed formulas or methods for finding the value of items of clothing. Amended tax form   You should claim as the value the price that buyers of used items actually pay in used clothing stores, such as consignment or thrift shops. Amended tax form      Also see Clothing and Household Items , earlier. Amended tax form Example. Amended tax form    Kristin donated a coat to a thrift store operated by her church. Amended tax form She paid $300 for the coat 3 years ago. Amended tax form Similar coats in the thrift store sell for $50. Amended tax form The fair market value of the coat is $50. Amended tax form Kristin's donation is limited to $50. Amended tax form Household items. Amended tax form   The fair market value of used household items, such as furniture, appliances, and linens, is usually much lower than the price paid when new. Amended tax form These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. Amended tax form For these reasons, formulas (such as using a percentage of the cost to buy a new replacement item) are not acceptable in determining value. Amended tax form   You should support your valuation with photographs, canceled checks, receipts from your purchase of the items, or other evidence. Amended tax form Magazine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Amended tax form Do not include any of this evidence with your tax return. Amended tax form   If the property is valuable because it is old or unique, see the discussion under Paintings, Antiques, and Other Objects of Art in Publication 561. Amended tax form   Also see Clothing and Household Items , earlier. Amended tax form Cars, boats, and airplanes. Amended tax form   If you contribute a car, boat, or airplane to a charitable organization, you must determine its fair market value. Amended tax form Boats. Amended tax form   Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser because the physical condition is critical to the value. Amended tax form Cars. Amended tax form   Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing complete dealer sale prices or dealer average prices for recent model years. Amended tax form The guides may be published monthly or seasonally, and for different regions of the country. Amended tax form These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical condition. Amended tax form The prices are not “official” and these publications are not considered an appraisal of any specific donated property. Amended tax form But they do provide clues for making an appraisal and suggest relative prices for comparison with current sales and offerings in your area. Amended tax form   These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. Amended tax form You can also find used car pricing information on the Internet. Amended tax form   To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. Amended tax form However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. Amended tax form The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car 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 car. Amended tax form Example. Amended tax form You donate a used car in poor condition to a local high school for use by students studying car repair. Amended tax form A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. Amended tax form However, the guide shows the price for a private party sale of the car is only $750. Amended tax form The fair market value of the car is considered to be $750. Amended tax form Large quantities. Amended tax form   If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Amended tax form Example. Amended tax form You purchase 500 bibles for $1,000. Amended tax form The person who sells them to you says the retail value of these bibles is $3,000. Amended tax form If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Amended tax form Your charitable contribution is $1,000, unless you can show that similar numbers of that bible wer