Save the Environment and Your Tax Bill

Deconstruction is the careful “un-building” of a structure with the intent of salvaging as much as possible for reuse, repurposing, or recycling, and can take a bite out of landfill dumping. Besides the environmental rewards, taxpayers can deduct the value of these donations and enjoy significant tax deductions.

A variety of structures can be “deconstructed” and materials and property donated.

These include:

• 1
  Beach houses
• 2
  Historical structures like schools and churches
• 3
  Kitchen and bathroom renovations
• 4
  Barns
• 5
  Commercial office complexes
• 6
  Residential tear-downs

What are examples of materials and property donated?

• 1
  Doors of all variety, solid core paneled, exterior, French, sliding glass
• 2
  Kitchen cabinetry and appliances
• 3
  Bathroom vanities
• 4
  Composite decking and other exterior materials
• 5
  Air conditioning condensers
• 6
  Water softeners
• 7
  Sinks
• 8
  Masonry—stone, brick, pavers
• 9
  Light fixtures
• 10
  Conference tables
• 11
  Office chairs
• 12
  Desks
• 13
  Wood flooring

How does the tax deduction work?

An individual, pass-through entity, or corporation can take a non-cash charitable donation.

For individuals and pass-through entities (LLCs, S-Corps) this flows through to the IRS individual income tax Form 1040, Schedule A. The deduction is capped at 50% of Adjusted Gross Income with a 5-year carryforward.

Corporations take the deduction on their corporate income tax return Form 1120 capped at 10% of net income with certain add-backs.

For all taxpayers, the value deducted is the Fair Market Value of the property concluded by an IRS Qualified Appraiser who produces an IRS Qualified Appraisal. This value is based upon actual market sales and offers of sale in the correct and relevant market, which is usually the auction market or secondary retail dealers.

A number of other factors must be considered including ensuring the taxpayer has basis in the assets and is not considered a dealer by the IRS. We are happy to walk through these details. Our CEO, Jessica Marschall, is both an IRS qualified appraiser and a CPA of 19 years.

IRS Qualified Appraisers

The Green Mission Inc. team is comprised of appraisers with requisite education in complementary subject areas including accounting, construction management, and business administration. Our appraisers are also accredited members of the International Society of Appraisers and have received training from the American Society of Appraisers and the Appraisers Association of America with a dedicated staff to research the necessary comparable sales data to accurately value donations in line with IRS code and appraisal organization standards.

Court Cases

Unfortunately, recent court cases have dissuaded some taxpayers from donating materials due to the disallowances of tax deductions in these cases.

In Mann v. US, decided on summary judgment in January 2019 and affirmed on appeal in early 2021, an appraiser failed to document the appraised inventory through photographs, did not keep detailed lists and then valued the donation erroneously using construction cost estimating software called R.S. Means and was deemed to have produced an unqualified appraisal. The appeal stated unequivocally that the value should have been based on market values.

In Loube v. Commissioner, decided in January 2020, the same appraisal firm used the same software to value the donation. The taxpayer failed to completely fill out IRS Form 8283 and the appraiser neglected to sign. However, attending an American Society of Appraisers monthly DC area meeting a few months back, IRS counsel presented the case as the IRS being able to disallow the donation on a technicality and did not even need to venture into the valuation, which was not determined correctly.

The Green Mission Inc. Difference

Our company aims to ensure deconstructed materials and property are accurately valued with a detailed appraisal report written like a research document. What makes our appraisals different?

• 1
  Our appraisers have MS degrees in subjects lending themselves to a firm understanding of valuation theory.
• 2
  Our CEO is a CPA of 19 years with a firm grasp of the surrounding Internal Revenue Code requirements for valuation and reporting.
• 3
  A current market analysis is performed at both the macro as well as micro level for the specific materials being donated.
• 4
  A complete description of each piece of property is provided within our reports, with the inclusion of characteristics of value such as measurements, materials, style, condition, as well as elements of quality including intrinsic property qualities that determine a higher or lower value on the market.
• 5
  We include detailed comparable sales analysis within the report and include an appendix with the comparable sales data print-outs included. We currently search over 250 auction and secondary retail dealer sites to ensure values are up-to-date and gathered from the relevant market. We also ensure an adequate number of comparable sales are examined to ensure high and low outliers are not included.
• 6
  We cross reference exactly with the nonprofit’s donation receipt to ensure only materials and property actually donated are included within the appraisal.

Please reach out to our Director of Business Development, Jennie Lumpkin, to begin the donation process. We are able to inspect either from photographs or will have an associate travel on-site to gather requisite photographs to provide an estimated quoted value range within 24-48 hours after receiving the information. The client can then discuss the donation with their tax professional and see if the donation makes sense for their individual tax situation before contracting for the appraisal. We can also facilitate introductions to various non-profit organizations nationwide in need of your donations.