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Tax Law (Questions About Taxes)/Charitable Contribution of $5,000+


QUESTION: Last year I donated a $40,000 electric wheelchair designed for ALS and MS patients to a non-profit. The chair belonged to my brother who passed away in 2010. Prior to his passing he sold me the chair for $1 so I had full rights to the chair.

I would like to claim the donation on my taxes with an appraised value of $10,000. However, I do not know if this is "legal" since my basis is less than the appraised value. I called the IRS and they were unable to answer the question!

Can you please advise me on this?  Thank you.


Thanks for your question.  The IRS was unable to answer your question, but they would sure be on it if you got wrong!

That is certainly legal.  In making a charitable contribution you take a deduction for your basis or fair market value, whichever is less.  In your case, the $1 is not your basis.  In a related-party transaction, when an item is sold for substantially less than the FMV, it is considered a gift, and your basis is a transferred based from your brother.  So your basis is $40,000 or whatever he paid for it.

As you know, since it exceeds $5,000 in value you must have it appraised and attach a copy of the appraisal to the return. You can deduct appraisal fees as miscellaneous itemized deductions on Schedule A, subject to the 2% limitation.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: You're right...they would be all over me if I get it wrong!

I appreciate the quick follow and have one more question. You say my basis is $40,000 or whatever my brother paid for it.  What if his actual out of pocket was only $1,000 since insurance paid for most of it?

Thanks again!



Got me there.  In other cases, where insurance payments are made for a loss on an items, the payments reduce the basis.  So that would argue for a basis of $1,000.  But I am not certain of this, as I can find nothing that deals with the specific issue.

Another possibility is if he "sold" it to you in contemplation of death, it could be considered an inheritance and not a gift.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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