The following information is from the IRS.gov website. To see entire content visit www.irs.gov
The federal tax code allows individuals and businesses to make noncash contributions to qualifying charities and to claim deductions for these contributions on their tax returns. Gifts of donated property, clothing, and other noncash items have long been an important source of revenue for many charitable organizations and a popular deduction for taxpayers.
The American Jobs Creation Act of 2004 created additional reporting requirements for individual taxpayers making noncash charitable contributions. This website provides information for contributors, charitable organizations, and tax professionals who represent them, about federal tax requirements for donated property.
This publication is designed to help donors and appraisers determine the value of property (other than cash) that is given to qualified organizations. It also explains what kind of information you must have to support the charitable contribution deduction you claim on your return.
This publication does not discuss how to figure the amount of your deduction for charitable contributions or written records and substantiation required. See Publication 526, Charitable Contributions, for this information. Click Here for Publication 526
What Is Fair Market Value (FMV)?
To figure how much you may deduct for property that you contribute, you must first determine its fair market value on the date of the contribution.
Fair market value.
Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. If you put a restriction on the use of property you donate, the FMV must reflect that restriction.
If you donate land and restrict its use to agricultural purposes, you must value the land at its value for agricultural purposes, even though it would have a higher FMV if it were not restricted.
In making and supporting the valuation of property, all factors affecting value are relevant and must be considered. These include:
The cost or selling price of the item,
Sales of comparable properties,
Replacement cost, and
Opinions of experts.
See Table 1 for a summary of questions to ask as you consider each factor.
Date of contribution.
Ordinarily, the date of a contribution is the date that the transfer of the property takes place.