FMV vs Basis Value


J

JH

I quote from the IRS page link;
http://www.irs.gov/formspubs/page/0,,id=11921,00.html

"Large quantities. If you contribute a large number of the
same item, fair market value is the price at which
comparable numbers of the item are being sold.

Example. You purchase 500 bibles for $1,000. The person who
sells them to you says the retail value of these bibles is
$3,000. If you contribute the bibles to a qualified
organization, you can claim a deduction only for the price
at which similar numbers of the same bible are currently
being sold. Your charitable contribution is $1,000, unless
you can show that similar numbers of that bible were selling
at a different price at the time of the contribution."

I am left wondering, how does this compare with the first
rule in tax deduction that you can't deduct FMV, your
deduction will only be the basis you have in it?

There is alot more I am left brain storming with, I guess I
am new to the game, can anyone advice?

I thanks in advance,
Joel
 
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A

A.G. Kalman

JH said:
I quote from the IRS page link;
http://www.irs.gov/formspubs/page/0,,id=11921,00.html

"Large quantities. If you contribute a large number of the
same item, fair market value is the price at which
comparable numbers of the item are being sold.

Example. You purchase 500 bibles for $1,000. The person who
sells them to you says the retail value of these bibles is
$3,000. If you contribute the bibles to a qualified
organization, you can claim a deduction only for the price
at which similar numbers of the same bible are currently
being sold. Your charitable contribution is $1,000, unless
you can show that similar numbers of that bible were selling
at a different price at the time of the contribution."

I am left wondering, how does this compare with the first
rule in tax deduction that you can't deduct FMV, your
deduction will only be the basis you have in it?

There is alot more I am left brain storming with, I guess I
am new to the game, can anyone advice?
Your confused on the rules relating to charitable gifts. I
buy ABC stock for $10. It goes up to $100. I desire to
donate $100 to my church. I donate the stock to my church,
rather than cash, and take a charitable deduction for the
FMV of my gift: $100.
 
A

Arthur L. Rubin

JH said:
I am left wondering, how does this compare with the first
rule in tax deduction that you can't deduct FMV, your
deduction will only be the basis you have in it?
I think this falls under the rule for donating appreciated
securities. IIRC, if your gain on a sale would be long term
capital gain, you can deduct the FMV on a donation.
 
M

Mike Lewis

JH said:
I quote from the IRS page link;
http://www.irs.gov/formspubs/page/0,,id=11921,00.html

"Large quantities. If you contribute a large number of the
same item, fair market value is the price at which
comparable numbers of the item are being sold.

Example. You purchase 500 bibles for $1,000. The person who
sells them to you says the retail value of these bibles is
$3,000. If you contribute the bibles to a qualified
organization, you can claim a deduction only for the price
at which similar numbers of the same bible are currently
being sold. Your charitable contribution is $1,000, unless
you can show that similar numbers of that bible were selling
at a different price at the time of the contribution."

I am left wondering, how does this compare with the first
rule in tax deduction that you can't deduct FMV, your
deduction will only be the basis you have in it?

There is alot more I am left brain storming with, I guess I
am new to the game, can anyone advice?
This sounds a lot like what I here at the used car lot:)

If you bought 500 bibles for $1000, how can FMV be anything
but $1000. The definition of FMV is (paraphrased) the amount
a buyer is willing to pay and a seller is willing to accept
for goods/services. In your example, the $3000 is similar to
the Sticker price on a new car.

Mike Lewis, CPA
 
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A

Arthur Kamlet

Arthur L. Rubin said:
JH wrote:
That indeed applies to property used in your trade or
business, and if this is depreciable property, basis is
reduced by the amount of depreciation.

If personal property, there is no depreciation and, if held
long term, you can deduct FMV.
I think this falls under the rule for donating appreciated
securities. IIRC, if your gain on a sale would be long term
capital gain, you can deduct the FMV on a donation.
If personal property, sure.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH
 

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