Strategies for Non-Cash Charitable Contribution. Tax Compliance and Planning TCP CPA Exam

Non-cash charitable contribution strategies explained for the CPA exam — this Tax Compliance and Planning (TCP) lecture shows how to value and deduct donations of inventory, appreciated securities, artwork, and vehicles. Professor Farhat helps CPA, CMA, and EA exam candidates and college accounting students master high-search topics like "how are non-cash charitable donations valued," "donating appreciated stock tax deduction," and "charitable deduction for donated cars." Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students. Video Timeline & Key Concepts: 0:00 — Introduction: planning for non-cash charitable contributions 0:50 — Qualified charities: deductions only for IRS-recognized 501(c)(3) organizations 2:05 — Ordinary income property (inventory, short-term assets): deduct the lesser of basis or fair market value 4:05 — Long-term capital gain property: deduct generally at fair market value 7:05 — Tangible personal property put to unrelated use: deduction limited to adjusted basis 9:30 — Donated vehicles sold for more than $500: deduct the lesser of proceeds or FMV 10:48 — Donated vehicles sold for $500 or less: deduct the lesser of $500 or FMV 13:13 — Strategy: sell loss property first, then donate the cash proceeds Frequently Asked Questions: Q: How is a non-cash charitable donation valued for a tax deduction? A: It depends on the type of property. Ordinary income property such as inventory is deducted at the lesser of adjusted basis or fair market value, while long-term capital gain property that has appreciated is generally deducted at fair market value. Q: Should I donate appreciated stock or sell it first? A: Donating appreciated long-term securities directly is usually more beneficial because you can generally deduct the full fair market value and avoid recognizing the capital gain. Selling first would trigger a taxable gain. Q: How is the deduction for a donated car determined? A: If the charity sells the vehicle for more than $500, your deduction is the lesser of the gross sale proceeds or the fair market value at donation. If it sells for $500 or less, the deduction is the lesser of $500 or the fair market value. Q: What happens if the charity does not use the donated item for its mission? A: For tangible personal property put to an unrelated use, such as artwork the charity sells rather than displays, the deduction is limited to your adjusted basis rather than the higher fair market value. Q: What is the best strategy for donating property that has lost value? A: When an asset has declined in value, it is often better to sell it first to claim the deductible loss, then donate the cash proceeds, rather than donating the property directly and forfeiting the loss. #CPAexam #CMAexam #enrolledagentexam #accountingcourses #collegecourses #courses #TaxComplianceAndPlanning #TCP #charitablecontribution #noncashdonation #itemizeddeductions #appreciatedstock #ProfessorFarhat #accountingstudents