According to Jeanne Safer, 5% of Americans lose a parent each year. I am one of that 5%. I am also one of the 76 million American baby boomers with a parent to assist. I'm very lucky that my father didn't need help with personal care, but with craigslist.
After posting the link to my mother's piano for sale on craigslist on my personal Facebook page, a friend suggested we donate the piano for a tax deduction rather than sell it.
I was certainly open to the suggestion. For all questions about money, corporate and personal, from M & As to IRAs, I turn to Jamie Dunn, CPA with Hodges, Jones & Mabry. I have his and my father's permission to share his email answer to my question: "Would we receive more value for selling or for donating?"
Jamie Dunn replied:
Factors to consider when answering the question, "Sell or donate?"
- With a donation of a non-cash item valued in excess of $5,000, you are required by the IRS to have an appraisal by a qualified person to support the charity contribution deduction that you take on your taxes. You cannot just donate it and let them give you a value for it or give it a value yourself like when we donate used goods to charities' thrift stores. An appraisal would have a cost, perhaps several hundred dollars, and would require finding a qualified appraiser in the area.
- From a tax perspective, a charity donation is a Schedule A itemized deduction, not a tax credit, so you do not receive a dollar for dollar reduction in your taxes from the donation.
- If you sell the item on craigslist or eBay, you do not have a taxable transaction. The “tax” was already paid when the item was originally purchased.
- Time is money – or can be. How long will it take to sell a used item on the open market? And at what price? If funds are needed immediately for living expenses, selling the item at below market value may be necessary.
- This does not have a dollar value, but from a donation you have a sense of satisfaction that it will be used by people who really appreciate it.
Newly informed, we've considered these factors and, for now, we've decided to continue to offer the piano for sale. Jamie's last point is the best one, however. We wish joy to the people who play my mother's piano, however they receive it.
Jamie Dunn, CPA, Partner with Hodges, Jones & Mabry, P.C. Certified Public Accountants, specializes in consulting services to start-up companies, business tax planning strategies, and accounting services for manufacturing, transportation, construction industries.
Hodges, Jones & Mabry, P.C. is a client of Handshake Media, Incorporated, the parent company of Handshake 2.0.