II. Accepting Cash Gifts
A. Donation Receipting/ IRS Regulations | B. ECC Receipt Form | C. Restricted and Designated Gifts | D. Christmas and Special Gifts to the Pastor | E. Memorial Funds | F. Stock as a Charitable Gift | G. Real Estate as a Charitable Gift | H. Tangible Personal Property, Partnerships and Royalties as Charitable Gifts

H. Tangible Personal Property, Partnerships, And Royalties As Charitable Gifts

Information helpful for financial officers responsible for processing gifts.

Introduction: There are many different types of tangible personal property which individuals may wish to use as gifts. Basically, tangible personal property is anything other than real estate or securities such as stocks and bonds. We will also discuss limited partnerships and royalties.

Tangible Personal Property

This includes items such as antiques, paintings, jewelry and other collectibles. Tangible personal property specifically excludes real estate or securities such as stocks, bonds, limited partnerships and oil royalties. Gifts of tangible personal property can be valuable and beneficial to your ministry. However, unless you are absolutely sure your ministry can and will retain the gift and use it to carry out the charitable purposes of your ministry, be sure to make the donor aware that the gift will be sold. Most charities sell all gifts of tangible personal property immediately if the gift is not to be used for the ministry's charitable purposes The recurring problem with gifts of this nature which cannot or will not be used by the ministry and must be sold is that the donor often has a significantly inflated opinion of the value and/or usefulness of the item. The sale of such a gift at a realistic market value has often resulted in hard feelings on the part of the donor. The donor often believes the charity did not market the asset correctly to get the best price, resulting in fewer dollars for the ministry than the donor had assumed. Read with special care the discussion on appraisals in Real Estate as a Charitable Gift, Section Ill.

Another major problem arises if the charity sells the asset within two years of receiving it, at a price less than the appraised price. At that point, the charity must file IRS Form 8282 which reports the actual sales price. The IRS may then challenge the amount of the donor's charitable contribution, resulting in an unhappy donor.

It is the donor's responsibility to obtain an appraisal to determine the amount which can be taken as a charitable contribution deduction. The appraised value is reported to the IRS on IRS Form 8283. Again, read with special care the discussion about appraisals and IRS Forms 8282 and 8283 in Real Estate as a Charitable Gift, Section Ill. Note that some donors can take only the cost basis of gifts of tangible personal property as a charitable contribution deduction, while others can take market value. It is the responsibility of the donor to check with his/her tax advisors before the gift is made to resolve this concern.

Gold And Gold Coins
These gifts require special consideration to assure they can be sold after they have been received by the charity. We suggest the charity be sure of how and to whom the gold or gold coins can be sold prior to accepting such a gift. It is the donor's responsibility to obtain an appraisal to determine the amount which can be taken as a charitable contribution deduction. The appraised value is reported to the IRS on IRS Form 8283. Again, read with special care the discussion about appraisals and IRS Forms 8282 and 8283 in Real Estate as a Charitable Gift, Section III. Note that some donors can take only the cost basis of gifts of tangible personal property as a charitable contribution deduction, while others can take market value. It is the responsibility of the donor to check with his/her tax advisors before the gift is made to resolve this concern.

Oil And Gas Royalties
Some oil and gas royalties can be sold by the recipient, but many cannot. Obviously it is not a hardship to the charity if a gift of royalties from an oil or gas well or other asset results in a monthly or quarterly check of any size for many years. But be sure to check with your ministry's tax advisor to determine if such a gift would result in an unrelated business income tax. (UBIT) liability for your ministry.

It is the donor's responsibility to obtain an appraisal to determine the amount which can be taken as a charitable contribution deduction. The appraised value is reported to the IRS on IRS Form 8283. Again, read with special care the discussion about appraisals and IRS Forms 8282 and 8283 in Real Estate as a Charitable Gift, Section III.