Nonprofits, unlike most businesses, have a separate monster to tackle when it comes to taxes – how to handle property that has been donated. Depending on what the property is, how much it is worth, and what it is used for, there are different rules to follow when reporting the property that was donated.
Schedule M (Form 990)
If a nonprofit receives donated property, Schedule M must be filed. This form allows the IRS to see what was donated and how noncash contributions were given monetary amounts.
Form 8282 (Donee Information Return)
If a nonprofit receives what is deemed “charitable deduction property,” and winds up either selling, exchanging, or disposing of it within 3 years, the nonprofit must file Form 8282. However, there is an exception to this rule. If the property is valued at $500 or less or it is distributed for charitable purposes, then Form 8282 does not need to be filed.
If Form 8282 must be filed, it must be submitted within 125 days after the property is exchanged and a copy must be given to the original donor.
*Note: the definition of a charitable deduction property is any property, except money or publicly traded securities, for which an appraisal summary or Form 8283 was completed by the donee organization.
This type of donation may have many different requirements that are listed in Publication 4302. Form 1098-C (Contributions of Motor Vehicles, Boats, and Airplanes) is usually required, depending on the circumstances. If you happen to have questions with this type of donation, please call us and we can go over the many different aspects.
Form 8899 (Notice of Income from Donated Intellectual Property)
When a donor has given notice that he/she is going to consider their contribution as a qualified intellectual property donation, Form 8899 must be filed.
This is just a starting point of how to handle donated property. Call Lescault & Walderman today for any concerns regarding the categories listed or any other donated property questions at 866-496-2042.