Tangible Personal Property

As with gifts of long-term capital-gain securities or real estate, a donor is entitled to a charitable deduction for a gift of long-term capital-gain tangible personal property such as works of art, rare books, and stamp or coin collections not created by the donor. (Note: The top capital-gain tax rate on such assets is 28%.) How much the donor can deduct depends on the so-called standard of “related use.”

Here is how the standard is applied: If the use of the contributed property is related to the exempt purposes of a charity (e.g., a painting to a museum or rare books to a library), the donor is entitled to a charitable income-tax deduction for the fair-market value of the property.

If the use of the contributed property is unrelated to the exempt purposes of the charity (e.g., stamp collection to UJA-Federation to sell and use the proceeds), the donor is entitled to a charitable deduction for his or her basis in the property.

A donor who contributes a work of art that the donor created is limited to the actual cost of producing the work for the charitable deduction.

Want to see a diagram about how a gift of tangible personal property works? View the diagram of this gift

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