Gifts of Property and IRS Forms 8282 and 8283

By Sandra Feinsmith, CPA

Have you received a phone call from a donor requesting that your organization value, complete and send them Form 8283 for their noncash contributions to submit with their tax returns?

Perhaps a donor asked why you sent them a Form 8282 for property that they donated to the organization two years ago that the organization has since sold. Many nonprofit organizations receive questions regarding both the donor’s and organization’s responsibilities for the completion and filing requirements regarding Forms 8282 and 8283. In this article, we will give a brief overview of Section B of Form 8283 which is the section that is applicable to donee organizations and triggers the filing requirements for Form 8282. We will then discuss the donee organization’s responsibilities regarding donors and filing Form 8282.

FORM 8283

Form 8283, Noncash Charitable Contributions, is required to be completed when partnerships or individuals claim a noncash charitable contribution deduction in excess of $500 on their respective tax returns or when a corporation claims a charitable deduction for a gift of property when the deduction is in excess of $5,000. However, Form 8283 is only required to be submitted to the donee organization for signature when the donation is greater than $5,000 and it consists of property other than publicly traded securities. It is the responsibility of the donor to complete all applicable sections of this form except for the Appraiser and Donee Acknowledgment sections. The form must be filed with the entity or individual’s tax return for the year the property was contributed and first claimed as a deduction.

Section B, Part I, Information on Donated Property of Form 8283 is required to be completed by the donor for noncash charitable contributions in excess of $5,000. In addition, except for certain types of donated property, the donor is required to obtain a written appraisal from an independent appraiser. In certain instances, the donor will be required to attach the written appraisal to their tax return. Types of property included in this section and subject to appraisal include artwork, collectibles, real estate, qualified conservation contributions, equipment and nonpublicly traded securities. Information to be included in this section is a description of the property, an appraisal of fair market value (if appraisal was required), the date acquired by the donor, the donor’s cost or adjusted basis, and the amount claimed as a deduction.

Section B, Part II is the Donor Statement. This section is to be completed by the donor for each item included in Section B, Part I that has an appraised value of $500 or less. It is important that the donor clearly identifies these types of items for the donee organization in Part II because the donee is then not required to file Form 8282, Donee Information Return (see below) for any items valued at $500 or less.

Section B, Part III of Form 8283 is the Declaration of Appraiser. This is the section that is completed by the appraiser of the property. The appraiser declares in this section that they are not a party to the transaction and meet the requirements to be considered a qualified appraiser.

Part IV of Form 8283 is the Donee Acknowledgement. As mentioned earlier, this is the section of the form that the donee nonprofit organization is required to complete and return to the donor. Please note that the donor is only required to complete Part I of Section B regarding the name, identifying number, and description of the donated property and Part II of Section B, if applicable, before submitting the form to the donee organization.

The purpose of this section of the form is to document (1) that the organization acknowledges that it is a qualified organization under the Internal Revenue Code and, (2) the date the property was received by the organization. The form must be signed by an official of the organization authorized to sign the tax returns of the organization. After the organization signs and returns the form to the donor, the donor must complete the form with all required information, including the appraised amount and then provide a copy back to the donee organization for their records.

There are two additional items to note regarding the donee acknowledgement section of Form 8283. If the organization expects that any donated tangible personal property will be used in a purpose unrelated to the organization’s function or mission at the time of the donation, the organization should check the “yes” box in Part IV. In addition, the charitable organization is required to affirm that if the organization (or a successor donee organization) disposes of the property within three years after the date the original donee received it, the organization must file Form 8282, Donee Information Return with the IRS and send a copy to the donor. As a result of the sale or disposition of the property by the donee organization, a donor’s charitable contribution deduction may be limited or subject to rules regarding recapture of donation amount.

Form 8282

As briefly discussed above, Form 8282, Donee Information Return, is required to be completed by a donee or successor donee charitable organization that sells or disposes of tangible personal property within three years of the receipt of the donation by the organization. This includes any donated property (other than money or publicly traded securities) if the claimed donation value exceeds $5,000 per item or group of similar items donated by the donor to one or more donee organizations. This is the property listed in Section B on Form 8283.

There are two exceptions where organizations do not need to file Form 8282:

1. Items are valued at $500 or less. The information to determine this comes from Section B, Part II of the donor’s original Form 8283.
2. Items that have been distributed or used for the organization’s charitable purpose. If the organization used or distributed the item, without receiving consideration in fulfilling the organization’s exempt purpose, then no reporting on Form 8282 is required. The IRS instructions give the example of a charity relief organization distributing medical supplies in assisting disaster relief victims.

Normally, organizations are required to file Form 8282 with the IRS and donor within 125 days after the disposition of the property.

At a minimum, organizations are required to provide the organization’s name, address and employer identification number (EIN), and complete at least Part III, columns 1, 2, 3 and 4 and Part IV. The other portions of Form 8282 are not required to be completed if the organization does not have the information.

There are two types of penalties associated with Form 8282:

1. The first penalty is the failure to file penalty. This penalty can be assessed when the organization fails to file the form by its due date, fails to include all required information or includes incorrect information on the form. The penalty is $50 per form. 
2. The second penalty is the fraudulent identification of exempt use property. The organization can be assessed this penalty if in Part III of Form 8282 it stated that tangible personal property donated to the organization was sold, disposed of or exchanged or was used in a way that was related to the exempt purpose of the organization when it fact it had knowledge that it was not intended for this purpose. In this situation, the organization could be assessed a $10,000 penalty.

There are also other information requirements that organizations should be aware of regarding Form 8282:

1. If property is transferred to another charitable organization within the three-year period of the date of donation, the organization must provide the following information to the successor donee:

2. Successor donees to whom property was transferred to from the donee organization are required to provide their name, address and EIN to the organization within 15 days of the later of:

Please note that the organization is required to give a copy of Form 8282 to the original donor of the property as well as keeping a copy of Section B of Form 8283 in their records.

Summary

To summarize, there are a number of suggested processes and procedures organizations should adopt to assist with the disclosure and recordkeeping requirements regarding Forms 8282 and 8283:

1. Develop and institute noncash donation acceptance and procedure policies, particularly for tangible personal property items valued at over $5,000. For example, include sections documenting the process of acceptance of noncash donations over $5,000, the organization’s requirements regarding the donor and Form 8283, the exempt use of donated property, the holding period of property before selling or disposing of it, and the Form 8282 itself.
2. Educate donors regarding their responsibility for the completion of Form 8283 so that there are no surprises for either the organization or the donor.
3. If the donor has questions regarding the deductibility of the donation, direct the donor to consult with their tax advisor.
4. Consult with your tax advisor early in the process regarding any Form 8283 or 8282 questions or filing requirements.

This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” newsletter (Summer 2011). Copyright © 2011 BDO USA, LLP. All rights reserved.  www.bdo.com