C.2. Form 8283 (Noncash Charitable Contributions Form) Spring 1992 Development Policy and Administration Manual Chapter IV. Gift Administration Procedures Section C. General Information About Noncash Gifts ************************************************************* FORM 8283 (NONCASH CHARITABLE CONTRIBUTIONS FORM) Following is a description of the use of Form 8283. This summary is not intended to provide in detail all the responsibilities of donors, and donors should be advised to consult a tax advisor or IRS Publication 561, Determining the Value of Donated Property, for more information. When to Use Form 8283 Whenever a deduction exceeding $500 is claimed for a noncash gift, the donor must file Form 8283, Noncash Charitable Contribu- tions Form (see sample at the end of this section) with the tax return. Completing Form 8283 Form 8283 is to be completed for other noncash gifts as follows. Section A. Section A must be completed for gifts of real or personal property or nonpublicly traded securities with a claimed value in excess of $500 but not in excess of $5,000. Gifts of publicly traded securities, which should be reported in Section A of Form 8283 even if their value exceeds $5,000, are: (1) securites listed on an exchange in which quotations are published daily; (2) securities regularly traded in national or regional over-the-counter markets for which published quotations are available; or (3) securities that are shares of a mutual fund for which quotations are published on a daily basis in a newspaper of general circulation throughout the United States. A qualified appraisal or an appraisal summary is not required for these publicly traded securities. Section B (Appraisal Summary). Donors must complete Section B when claiming a charitable deduction in excess of $5,000 for a noncash gift (except those publicly traded securities reportable in Section A). A separate Form 8283 is required for each item that is donated, although a group of similar items that can be considered in the aggregate (i.e., property of the same generic category, such as a group or number of stamps, coins, litho- graphs, or books) should be treated as a single gift. If the donor contributes items to more than one institution, a separate Form 8283 must be submitted for each donation, even if the value of items given to one institution is less than $5,000. Besides completing Section B, donors must obtain a qualified written appraisal (see Section IV: C.3) for noncash donations whose claimed value exceeds: (1) $5,000 for any single item of personal or real property; (2) $5,000 in the aggregate for similar items of property whether donated to one or more institutions; or (3) $10,000 for nonpublicly traded securities (although an appraisal is recommended for nonpublicly traded stock valued between $5,000 and $10,000). In determining whether a particular gift falls within these criteria, the key word is "claimed value"; for example, if a donation is made of a remainder interest whose value to the University (and charitable deduction claimed therefor) is less than $5,000, no appraisal is necessary, even if the value of the item itself exceeds $5,000. For gifts made after June 6, 1988, the appraisal summary must disclose whether the donation involved a bargain sale and, if so, the amount the donor was paid. Donors must ensure that the appraiser signs Part IV of Section B, Certification of Appraiser. If donors have obtained more than one appraisal, it is not necessary to use them all to substan- tiate the deduction. Donors are asked to retain a copy of the appraisal itself with their other tax records but need only attach the appraisal summary (Form 8283) to their returns, except in the case of art work valued at more than $20,000; then it is necessary also to attach a copy of the appraisal itself and an 8 x 10 inch color photograph or a color transparency no smaller than 4 x 5 inches. If the donor is a partnership or an S corporation, the donor must provide a copy of the completed Form 8283 to each partner or shareholder who receives an allocation of the charitable deduc- tion. Donee Signature Acknowledgment Section The IRS regulations provide that the appraisal summary (Part B of Form 8283) must include an authorized signature from the donee organization. The donee organization should not sign Form 8238 until the donor or the appraiser has completed the required description of the property. (Note: If property is given to a charitable remainder trust, the trust is considered the donee, and the trustee or a designee should sign Form 8283.) The institution's signature on Form 8283 represents only acknowl- edgment of receipt of the items described in the Appraisal Summary, and in no way indicates its agreement with or acceptance of the amount claimed. Donors are required to furnish the donee with a copy of the completed Form 8283, and the donee must retain it "for so long as it may be relevant to the administration of any internal revenue law", i.e., normally three years unless the donor is audited. Penalties for Donors If the donor fails to submit Form 8283 with the tax return, the deduction may be disallowed unless the failure was due to a good faith omission. The IRS allows donors 90 days to submit the completed Form 8283 on request before the deduction is dis- allowed. If the claimed value is 200% or more of what the IRS allows and, as a result, the donor underpaid tax by more than $5,000, the penalty for the donor is 20% of the resulting tax underpayment. If the claimed value is 400% or more of what the IRS allows and, as a result, the donor underpaid tax by more than $5,000, then the penalty for the donor is 40% of the resulting tax under- payment. The penalty applies regardless of how long the donor has owned the property. The IRS's ability to waive penalties is more limited than under previous IRS regulations.