The IRS regulations surrounding horse donations can be complicated. We get questions from clients, trainers, and even other industry appraisers often! To ensure your appraisal is in compliance, we've put together a post outlining the IRS' specific regulations, which can be found in IRS Publication 526: Charitable Contributions. Here are some key regulations to consider when donating a horse:
Appraisal: One of the most important IRS regulations for donating a horse is obtaining an appraisal from a qualified appraiser. If the value of the horse exceeds $5,000, the donor must obtain a written appraisal from a qualified appraiser. The appraisal must include a detailed description of the horse, including its breed, age, sex, and any unique characteristics that affect its value.
Donation Form: The charity receiving and the qualified appraiser must sign the IRS 8283 form for charitable contribution, which is used to report non-cash charitable contributions. The donor must attach this form to their tax return if the value of the horse exceeds $500.
Use of the Horse: If the charity plans to use the horse for its own purposes, such as for therapy or education programs, the donor can deduct the FMV of the horse. If the charity plans to sell the horse, the donor can only deduct the amount the horse sold for.
Acceptance Letter for Record Keeping: The donor should always ensure the receiving non profit sends them a letter acknowledging receipt of their donation. This helps fulfill the IRS' Record Keeping requirements. The letter, 8283 form, and completed appraisal are an integral part of this requirement, as well as keeping track of your communication with the charity.
It's important to consult with a qualified tax professional and a professional horse appraiser to ensure that your donation complies with all IRS regulations and that you receive the maximum tax benefit for your charitable contribution.
