Donating Property to Charities - a savvy tax planning strategy

During the current COVID pandemic, many homeowners are initiating their own DIY home projects. They are also finding that gorgeous, high quality furnishings, fixtures, appliances and building materials are available for sale at significant discounts when buying from the reuse market vs. new. Not only have new buyers chosen this market but sellers have upped their game—transitioning to savvy online retailers, sometimes selling directly from the job and donation site while maintaining their retail operations.

This shift from buying new to buying used not only provides economic benefits to those purchasing materials but promotes environmental awareness. Not only does it reduce waste, it reduces the manufacturing of new materials and extends the life of existing materials for years to come. Not to mention the reduction in waste going to landfills.

At The Green Mission Inc., we are at the forefront of promoting waste diversion through donation and reuse. We assist our clients with the donation process, produce IRS Qualified Appraisals for tax deductions and ensure clients and their CPAs have all the information needed to complete their tax filings before submission.

Increased Donations

Taxpayers are becoming wise to the value of donating their property and or building materials for the benefit of receiving a tax deduction. For individuals and pass-through entities, this deduction is taken on their 1040 Schedule A as a Non-Cash Charitable Contribution and for corporations, on their 1120. Many have figured out that by the time you put the materials up for sale at auction, consignment or on a website, wait for the sale to occur, pay commissions and then transport or ship the materials to recipients, the net gain for their effort is not more and often less than the tax deduction value if they had just donated.

The bright side is that consumers and corporations can donate to a charity or nonprofit, dropping materials off or having the materials picked up conveniently. They can have the materials appraised at the IRS defined Fair Market Value and receive the tax deduction for their donation when they file their tax return.

The Donation Process

• 1
  For taxpayers with donations requiring appraisals (those with donation values in excess of $5,000), clients can contact us and arrange for either an in-person inspection of the materials from one of our nationwide associates or can send us detailed photographs of the materials to be donated.
• 2
  Whichever you choose, within 24-48 hours, we will return a quote to the client or their representative of an estimated fair market value range for their donation. We encourage them to discuss the donation with their CPA or tax professional to ensure the tax deduction makes sense based on their individual tax situation.
• 3
  The donor can then contact a nonprofit charity or governmental entity to determine if they have need and can accept the donation. The IRS provides a full list of qualifying charities at this website: https://apps.irs.gov/app/eos/.
• 4
  If needed, we can research and are happy to recommend nonprofits and charities in need of the materials in your locality.
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  Upon engagement with our company, the donation is then made between the donor and nonprofit. Once the nonprofit completes their receiving and administrative paperwork they will send us an itemized donation receipt detailing the materials donated and accepted.
• 6
  We then conduct approximately 4-8 weeks of appraisal research, including reviews for accuracy and quality. The completed appraisal is then provided to you and any other intended users you assign. We also complete our portion of the required IRS Tax Form 8283 for Non-Cash Charitable Donations as the IRS Qualified Appraiser then send the form to the nonprofit for completion of their portion as the 501(3)(c) nonprofit receiving the donation and they forward it directly to you. We always recommend submitting both the appraisal and accompanying IRS 8283 Tax Form with your return.

What Makes The Green Mission Inc Different Than other Appraisal Organizations?

We pride ourselves on our exact adherence to IRS Code and personal property appraisal organizations procedures for research, valuation, and reporting of appraisal results. Our team is led by Jessica I. Marschall, a practicing CPA of 19 years with a MS in Accounting who is also a qualified appraiser. Our COO, Mayur Dankhara, has a MS in Construction Management and is an accredited member of the International Society of Appraisers. Our VP, Diane Scarbrough, has been producing appraisals for both real and personal property for over fifteen years. Our Director of Business Development and Insurance Analytics, Jennie Lumpkin, has been working within the insurance and personal property appraisal industry for over two decades.

• 1
  IRS Qualified Appraisers must have requisite education and membership in a personal property appraisal organization. They must follow the Uniform Standards of Professional Appraisal Practice (USPAP), which we ensure we produce credible appraisals upon which the public can trust.
• 2
  We follow research, valuation, analysis, and reporting requirements set forth by the three personal appraisal organizations, which are sponsors of The Appraisal Foundation: American Society of Appraisers (ASA), Appraisers Association of America (AAA) and International Society of Appraisers (ISA).
• 3
  Each of the aforementioned appraisal organizations recognizes that the Sales Comparison Approach, or market based approach is to be used in the majority of personal property appraisals. This method analyzes past sales and offers for sale of comparable property in the relevant market. The value of the appraised property is derived from actual market sales data.
• 4
  In addition to our use of the correct valuation methodology, we also ensure that all researched materials include a requisite number of comparable sales to arrive at a credible value conclusion. For some materials, this may be three comparable sales and for others it may be fifteen. Along with researching these comparable materials, we include the comparable sales data within the appraisal report. This allows the client, CPA, IRS, and other intended users to evaluate the value conclusion in detail.
• 5
  In conclusion, we ensure we document our reconciliation between the comparable materials and the appraised materials when determining values. We document similar property characteristics as well as elements of value and adjust the appraised value up or down based upon our qualitative ranking of the comparable materials in comparison to those appraised. The appraisal report includes this detailed analysis.

Discover the Difference

According to all three personal property appraisal organizations, an appraiser's report is their finest piece of advertising available. We pride ourselves on having some of the highest standards in the industry as evidenced in our processes and reports. Our appraisals take time and effort—both in abundance. Our fees align with other appraisers despite the weeks of time we spend ensuring our conclusions are credible and valid compared to some companies who provide sparse detail in the appraisal report or use alternative valuation methodologies. Beyond our four key executives listed above, we have a support staff of property inspectors around the country, staff researching comparable sales and relevant markets and appraisal associates with expertise in appraisal specialty areas. Our goal is to provide our clients with an appraisal on which they and their tax professional can rely.

Please contact our office for questions on potential donations, our processes, tax questions or appraisal related questions.