CHARITABLE DEDUCTION FOR CLOTHING – NEW COURT CASE:

In Bass, TC Memo 2023-41, 3/27/23, the court upheld the requirement for an independent appraisal if the non-cash donation exceeds $5,000 and how that is defined.

Facts of the Case: In 2017, the taxpayer, a resident of North Carolina, donated men’s, women’s and children’s clothing and various non-clothing items to Goodwill and the Salvation Army. He made 173 separate trips to Goodwill and the Salvation Army, often multiple times on the same day to avoid, in his viewpoint, the need to have the items appraised.

For each trip, a Goodwill or Salvation Army worker provided the taxpayer with a donation acknowledgment receipt. In turn, he filled each one out, listing the items donated and their fair market values.

The Goodwill receipts reflect donated items totaling $18,837, consisting of clothing totaling $13,852 and other household items. The Salvation Army receipts reflect donated items totaling $11,779, consisting of clothing totaling $11,594 and a handful of household items. The total deduction for clothing alone in 2017 came to $25,651.

The taxpayer attached two Forms 8283 to his return, but did not obtain a written appraisal. He claimed that he did not need one because he did not donate any single item worth over $5,000. But the Tax Court affirmed that all similar donated property must be aggregated for this purpose. Since the taxpayer donated over $5,000 in clothing to the two charitable organizations, a qualified appraisal is required.

Result: The taxpayer’s entire deduction for property is denied.