8064 / What requirements apply if a taxpayer makes a donation to charity that is subsequently disposed of by the charity within three years of the donation?

If the charitable donee disposes of “charitable deduction property” that is subject to the rules set forth in Q 8061 or Q 8063 within three years after its receipt, the donee must provide an information return to the IRS. Charitable deduction property includes any property (other than publicly traded securities) for which a charitable deduction was taken under IRC Section 170 where the claimed value of the property (plus the claimed value of all similar items of property donated by the donor to one or more donees) was in excess of $5,000.¹ The return must show the name, address, and taxpayer identification number of the donor, a description of the property, the date of the contribution, the date of disposition, and the amount received on disposition. A copy of the return must be provided to the donor. Failure to file the return may subject the donee to a penalty.² However, final regulations will provide that donee reporting is not required upon disposition of donated property within three years of receipt if the value of the property (as stated in the donor’s appraisal summary) was not in excess of $5,000 at the time the donee signed the summary. In addition, no reporting will be required if the donee consumes or distributes property without receiving anything in exchange and the consumption or distribution is in furtherance of the donee’s charitable purpose (such as the distribution of medical supplies by a tax-exempt relief agency).³