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Charitable Donations: Jewelry

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Ideal_Rock
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If you donate a nice piece of jewelry to a charity, is your tax deduction based on what it would fetch from a dealer, or on it''s retail value?

TIA
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rockzilla

Brilliant_Rock
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Nov 19, 2006
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My guess is that it would be similar to the new laws they passed with cars - you can deduct whatever the charity would be able to sell it for. Formerly it was the "blue book" value, but now it is the actual price. So, if you donated your $10k tiffany ring to a charity and they auctioned it for $7k, you could deduct $7k. Or, if they sold it to a dealer for $4k, that is what you would be able to deduct. Or, if they consigned it to a dealer and it sold for $9k (say the dealer even charges 20% fee to sell it) you could deduct $9k.

Probably best to ask the charity though...or your tax advisor!

RZ
 

mrssalvo

Super_Ideal_Rock
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..sorry widget, I have no idea but I bet Rockdoc would know. maybe he''ll see this and chime in..
 

widget

Ideal_Rock
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I can find out on Monday, but I thought it might be an interesting topic.

I just got back from selling some old jewelry. I have a couple "higher end" pieces that I bought many years ago when I was stupid and ignorant. I''m horrified and ashamed of how much I spent on them....now I''m equally horrified at how little I can get for them now.


It occurred to me that "giving them away" might be a another way to approach this. But I bet Rockzilla is right...pooh!

widget
 

AGSHF

Shiny_Rock
Joined
May 7, 2004
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147
widget,

If you donate property, generally the amount you can deduct is "fair market value." In the case of vintage jewelry, I would imagine that the best approximation is appraised value. If it is a more modern piece, it''s possible that you can find a closely comparable piece and use that piece''s value as comparison. We recently donated a large amount of tech equipment and the receipient gave us an acknowledgment letter in which they stated the value.

The rules for charitable deductions of property require a receipt of acknowledgment from the qualified charitable recipient. There are different requirements for what you must file depending on the value of the property you donate but, for example, if you donate a piece for which you claim a deduction over $5,000, you must have the acknowlegement and a qualified written appraisal for the donated item from a qualified appraiser.

Some charities welcome donations of valuable property and they may be able to advise you on the pros and cons.
 

canuk-gal

Super_Ideal_Rock
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Date: 2/16/2007 10:47:39 PM
Author:
I just got back from selling some old jewelry. I have a couple 'higher end' pieces that I bought many years ago when I was stupid and ignorant. I'm horrified and ashamed of how much I spent on them....now I'm equally horrified at how little I can get for them now.

widget
HI:

Widget--I "feel your pain"! My Mom asked me to assist with the process of downsizing her jewellery collection last summer--many of the pieces were high quality/custom when my Dad (he was a jeweller) owned his store/shop. Like you, I was shocked at what was eventually, realized. It honestly never occured to me to inquire about charitable donations--wish I had.

Sorry your trip to Palm Beach, did not go as planned!

cheers--Sharon
 

Beacon

Ideal_Rock
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Jul 14, 2006
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Interesting you should ask this.

I am donating some earrings to a charity. I have the original sales receipt from Shreves and a new appraisal from a jeweler. The charity told me that with this documentation they would give me a letter stating my donation to them was for this appraisal amount.

My accountant was ambiguous on the matter. Certainly for automobiles it is the amount the charity realizes for the car. It seems like this is the case for the jewelry, but if the charity gives me this letter with a stated amount, maybe I can use it.

As you know, under the old rules, when you donate a car, the charity does not specify the amount you get. They only give you a letter acknowledging the gift. Under the new rules they later have to tell you what they realized on the sale.

I am going to go back and ask my accountant again and get her final opinion.

BTW, you might want to check in with Art Nouveau, she often gives charitable donations of jewelry.
 

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Ideal_Rock
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Thanks Beacon (and for the empathy, Canuk-gal
)

Interesting...sometimes I think when a tax advisor is "ambiguous" about something, what he''s saying is: "you can do it that way, but don''t tell anyone I told you so..."

Maybe I''ll drop AN a line if we don''t hear from her soon...

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Skippy123

Super_Ideal_Rock
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Nov 24, 2006
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I am an accountant but don't do taxes. I knew I could find a good answer. This is from bankrate:
Whether you can deduct the cost or the value depends on whether the organization will put the property to use in its function or whether it will be sold for its value. Usually, charitable gifts of capital gain property are deductible at their value, even if more than their cost. Jewelry would be considered capital gain property.

However, if the donated property is personal (versus real) property and it is put to use in a function unrelated to the charity's purpose, your contribution deduction is limited to its cost.



For example, if a painting contributed to an educational institution is used by that organization for educational purposes by being placed in its library for display and study by art students, the use is not an unrelated use. But if the painting is sold and the proceeds are used by the organization for educational purposes, the use is an unrelated use. If the property will be put to an unrelated use, then you're better off selling it, recognizing the gain and claiming an offsetting deduction for the proceeds.



Assuming your contribution is to a museum, for example, you can get a deduction for value without having to go through the effort of selling the pieces. However, if the value of the jewelry collection exceeds $5,000, you'll be jumping through some hoops to claim the deduction. Publication 561 describes the procedures for claiming a charitable contribution of property with a value in excess of $5,000. For one thing, you'll need a qualified appraisal, by a qualified appraiser. The publication describes the following considerations when valuing jewelry:



Jewelry and gems are of such a specialized nature that it is almost always necessary to get an appraisal by a specialized jewelry appraiser. The appraisal should describe, among other things, the style of the jewelry, the cut and setting of the gem and whether it is now in fashion. If not in fashion, the possibility of having the property redesigned, recut or reset should be reported in the appraisal. The stone's coloring, weight, cut, brilliance and flaws should be reported and analyzed. Sentimental personal value has no effect on fair market value. But if the jewelry was owned by a famous person, its value might increase.

The publication also discusses what constitutes a qualified appraisal as far as the contents of the report as well as the qualifications of the appraiser. The cost of the appraisal would be considered a miscellaneous itemized deduction.

Here is some more useful info: http://www.agiweb.org/smmp/rept-don-usnm.htm

also go to IRS.gov and enter publication 561 which will bring up new info for this year.
 

Beacon

Ideal_Rock
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Jul 14, 2006
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2,037
Thank you so much for this information.

I still am slightly puzzled. Almost certainly the charity will sell my jewelry donation. So, is my deduction limited to their realized sale value once they sell it or, since I have a very thorough appraisal and original sales receipt, can I deduct the appraised value (very close to sales receipt value)? The charity is willing to give a letter stating the appraised value as the amount of my contribution, while of course specifying that it is a contribution of jewelry, not cash.

It certainly is confusing!!
 

strmrdr

Super_Ideal_Rock
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Nov 1, 2003
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A lot of them around here have stopped accepting property because the tax situation is a nightmare for them as well as the donor, they tell people to sell it and donate the money instead.
 

strmrdr

Super_Ideal_Rock
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Nov 1, 2003
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Date: 2/17/2007 9:53:45 PM
Author: Beacon
Thank you so much for this information.

I still am slightly puzzled. Almost certainly the charity will sell my jewelry donation. So, is my deduction limited to their realized sale value once they sell it or, since I have a very thorough appraisal and original sales receipt, can I deduct the appraised value (very close to sales receipt value)? The charity is willing to give a letter stating the appraised value as the amount of my contribution, while of course specifying that it is a contribution of jewelry, not cash.

It certainly is confusing!!
ask 10 accountants and you will get 8 different answers.
Claiming the amount they sell it for is the safest way in case of an audit.
The charities themselves cant get a strait answer on how they are too report/record it.
 

Skippy123

Super_Ideal_Rock
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Itemize in Order to Benefit — Many taxpayers can’t take a deduction for donations because they don’t itemize deductions on their personal tax return. For taxpayers, the decision to itemize is determined by whether their total itemized deductions are greater than the standard deduction (for 2003, the standard deduction will be $4,750 for single; $9,500 for married filing jointly). Just under one-third of the nearly 129 million individual taxpayers itemized in 2000, the last year for which complete data is available. (Taken from the IRS website's publication 17). Right now it is 10,300 for married couples.
I wish a tax accountant would chime in.

Also, make sure you are donating it to a 501c3. They need to give you a receipt of the value save that and save a copy of the appraisal for your records.

Where is "The Other Jake" I think he is a tax accountant.
 
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