You don't have to go to church every Sunday or be particularly religious to believe in the biblical saying that "to those whom much is given, much is expected." No matter how much or how little you can afford to give, making a donation to a worthy cause always makes you feel good. Many people donate cash and many others choose to make a donation of property.
While giving is its own reward, the IRS also rewards those who make charitable contributions to qualified organizations. As long as you meet certain guidelines and follow some basic rules, you probably will be able to take a deduction on your tax return for the fair market value of your donation.
Claiming a Deduction for Donated Equipment or Machinery
Individuals, partnerships, and corporations are all eligible to claim a tax deduction on their tax return for donated equipment or machinery. When you donate equipment, machinery, or any other tangible asset, and the listed fair market value is in excess of $500, you are required to fill out IRS Form 8283 (Non Cash Charitable Deductions). On donations above $500, but no more than $5,000, you need to fill out Section A of Form 8283 and you usually don't need to provide an equipment appraisal. On donations above $5,000, you must fill out Section B of Form 8283 and you usually do need to provide an appraisal.
Why Does the IRS Require Equipment Appraisals?
The agency that is responsible for collecting taxes does not necessarily think that everyone will overstate the value of their donation so they can claim a bigger deduction, but they are not stupid. People do cheat. Have you ever donated a bag of slightly worn clothes to Goodwill worth maybe $50 and claimed a deduction for $450 (remember no appraisal is needed if the donation is under $500)?
The IRS generally does not question donations under $500, but you should keep records/receipts of all charitable gifts just in case they do. An equipment and machinery appraisal is required on more highly-valued items because the potential "cheating" can seriously reduce the amount of revenue the agency receives.
In most cases where you need an appraisal, you don't need to attach it to Form 8283 and submit it with your return. An exception would be if your claimed donation is over $500,000. Keep the donation appraisal in your records just in case the IRS questions the amount of the claimed deduction.
Who is a Qualified Appraiser?
Equipment value established by an accredited equipment appraiser is more likely to be accepted as accurate by the IRS. In general, a qualified or accredited equipment appraiser has the experience, education, and ability to perform an equipment or machinery valuation by following generally accepted appraisal standards. Accredited equipment appraisers are so designated by the American Society of Appraisers and are compliant with the Uniform Standards of Professional Appraisal Practice.
You would not want to rely on a real estate appraiser if you needed to have your art collection appraised. You would hire an accredited art appraiser. Similarly, if you are interested in a machinery and equipment appraisal to establish fair market value for your donation, you would hire an appraiser specifically trained to appraise the type of property being donated.
How do you find a Competent Equipment Appraiser?
Don't try to save a few dollars by hiring the cheapest appraiser you can find. You should always look for an accredited equipment appraiser who has the credentials to do an accurate assessment of equipment values. Using an appraisal company that only hires accredited appraisers is probably the best way to assure that you will get a competent equipment appraiser and an accurate appraisal for the equipment you want to donate.