What Is an In-Kind Donation: Deduction Limits, FMV, and Form 8283

An in-kind donation is a charitable gift of property rather than cash — stock, real estate, a vehicle, artwork, used clothing, cryptocurrency, or any other asset given to a qualifying nonprofit. If you itemize, you can generally deduct the property’s fair market value on your federal return, but how much you can actually claim depends on what you gave, who received it, how they use it, and how well you document the transfer. Itemizing only pays off when your total itemized deductions beat the standard deduction, which for 2026 is $16,100 for single filers and $32,200 for married couples filing jointly.¹

What Property Qualifies

Non-cash contributions cover a wide range: publicly traded stock, real estate, business equipment, vehicles, artwork, jewelry, furniture, clothing, and cryptocurrency. Section 170 of the Internal Revenue Code authorizes a deduction for any charitable contribution of property made to a qualified organization during the tax year.²

One boundary trips up a lot of donors: your time and professional services are never deductible, no matter how valuable. A lawyer who gives 40 hours of pro bono work to a charity cannot deduct the value of those hours. Unreimbursed out-of-pocket costs you incur while volunteering — supplies, mileage driven for the charity’s benefit — do qualify.

Which Organizations Count

Doing good work isn’t enough. Section 170(c) limits the deduction to specific recipients: religious organizations, nonprofits organized for charitable, scientific, literary, or educational purposes, veterans’ organizations, and federal, state, or local government entities when the gift serves a public purpose.²

Gifts to individuals, political organizations, and candidates for public office are not deductible, even when the purpose feels charitable. The IRS maintains a Tax Exempt Organization Search tool at irs.gov if you need to verify a recipient.

How the Deduction Amount Is Determined

The size of your deduction turns on two things: the type of property and how the charity uses it. This is where most donors either leave money on the table or claim too much and invite penalties.

Ordinary Income Property vs. Capital Gain Property

The IRS sorts donated property by what kind of gain it would have produced if sold.

Ordinary income property is anything that would generate ordinary income rather than a long-term capital gain if sold at fair market value. Inventory, short-term stock holdings owned a year or less, and artwork created by the donor all qualify. For this category, your deduction is capped at your cost basis — what you paid for it — not current market value.³

Capital gain property is any asset that would have produced a long-term capital gain if sold, meaning you held it more than one year. Appreciated stock, long-held real estate, and collectibles fall here. For capital gain property donated to a public charity, you can generally deduct the full fair market value, appreciation included, and skip capital gains tax on the growth entirely.³

The Related Use Rule

When you donate tangible personal property like artwork, equipment, or furniture, the charity’s intended use directly affects your deduction. If the charity uses the property in a way connected to its tax-exempt mission (a painting donated to an art museum for display, say), you can deduct the full fair market value.

If the charity plans to sell the property or use it unrelated to its mission, your deduction drops to your cost basis. Section 170(e)(1)(B) requires this reduction whenever the donee’s use is unrelated to its exempt purpose, or whenever the charity sells the property before the end of the tax year without certifying an exempt use.³ The related use rule applies only to tangible personal property, not to publicly traded stock or other intangibles.

Annual AGI Limits and Five-Year Carryforward

Even when you qualify for a full fair-market-value deduction, the IRS caps how much you can actually claim in a single year, based on a percentage of your adjusted gross income. These ceilings matter most for large donations:

60% of AGI: Cash contributions to public charities such as churches, schools, hospitals, and organizations with broad public support.
50% of AGI: Non-cash contributions of ordinary income property to public charities.
30% of AGI: Capital gain property donated to public charities. This is the ceiling that applies to most appreciated stock and real estate gifts.
20% of AGI: Capital gain property donated to private foundations (other than certain private operating foundations).

These limits come from Section 170(b)(1) and apply separately depending on the combination of property type and recipient.²

Donations that exceed the applicable ceiling aren’t lost. You can carry the unused portion forward for up to five additional tax years, using the oldest carryforward first, with the same percentage limits applying in each later year.³ Anything still unused after five years is gone.

Determining Fair Market Value

Fair market value is the price the property would sell for on the open market between a willing buyer and a willing seller, both with reasonable knowledge of the facts and neither under pressure to act.⁴ The value must reflect the property’s condition at the time of donation, not what you paid or what it might be worth later.

How you establish FMV depends on the asset:

Publicly traded securities: The average of the highest and lowest quoted selling prices on the donation date. Stock that traded between $9 and $11 that day has an FMV of $10.⁴
Real estate: A professional appraisal based on comparable sales, income, or replacement cost methods.
Used clothing and household goods: What buyers actually pay in consignment or thrift shops, not original retail. The IRS warns these items are usually worth far less than their new price.⁴
Vehicles: Private-party sale values from established pricing guides, not dealer retail.

Your basis matters when the full FMV isn’t allowed. For purchased property, basis is generally cost plus improvements. For inherited property, basis is usually the fair market value on the decedent’s date of death.⁵ For property received as a gift, you generally carry over the donor’s basis.⁶

Special Rules by Donation Type

Clothing and Household Items

Donated clothing and household goods must be in good used condition or better for any deduction to count. The IRS will deny the deduction entirely for items that fail this standard.⁷ One exception: if you claim more than $500 for a single item that isn’t in good condition, the deduction still works if you include a qualified appraisal with your return.

Household items include furniture, appliances, electronics, and linens. They do not include paintings, antiques, jewelry, gems, or stamp and coin collections, which fall under general personal property rules with different valuation standards.⁴

Vehicles, Boats, and Airplanes

Vehicle donations follow Section 170(f)(12). If the charity sells your vehicle without making significant use of it or materially improving it, your deduction is capped at the gross proceeds from that sale, not the Kelley Blue Book value.³ This surprises many donors.

The charity must provide Form 1098-C within 30 days of selling the vehicle, or within 30 days of the contribution if it plans to use or improve the vehicle. You need this form for any deduction over $500.⁸

Publicly Traded Stock

Donating appreciated stock held more than a year is one of the most tax-efficient gifts available. You deduct the full fair market value and avoid capital gains tax on the appreciation. Unlike most non-cash gifts worth over $5,000, publicly traded securities don’t require a qualified appraisal and go on Section A of Form 8283 rather than Section B.⁹

Cryptocurrency

The IRS treats virtual currency as property, not currency. Crypto held more than one year lets you deduct the fair market value at the time of the contribution.¹⁰ Crypto held a year or less is ordinary income property, so your deduction is limited to cost basis.

Crypto does not get the appraisal exemption that publicly traded stock enjoys. If you claim more than $5,000 for a crypto donation, you need a qualified appraisal. A printout from an exchange showing the spot price will not satisfy the requirement, and the donor pays for the appraisal.

Partial Interests

If you donate less than your entire interest in a piece of property, say by giving a charity rent-free use of a building while keeping ownership, no deduction is allowed unless the gift fits a narrow exception such as a remainder interest in a personal residence or an undivided portion of your entire interest.¹¹

Documentation and Substantiation

The IRS applies a tiered documentation system that gets stricter as donation value climbs. Fall short at any tier and the entire deduction can be disallowed, even when the gift itself was legitimate.

Any Amount

For every non-cash contribution, keep written records showing the name of the organization, the date of the donation, a description of the property, its fair market value, and how you arrived at that value.

$250 or More

You need a contemporaneous written acknowledgment from the charity. It must describe the donated property (though not state a value), say whether the charity gave you anything in return, and provide a good-faith estimate of the value of any goods or services received.¹² “Contemporaneous” means you must hold the acknowledgment before you file the return claiming the deduction.

Over $500 in Total Non-Cash Gifts

Once combined non-cash contributions for the year pass $500, you must file Form 8283 with your return and report how you acquired each item along with your cost basis.⁹

Over $5,000 Per Item or Group of Similar Items

At this level you need a qualified appraisal from a qualified appraiser. The appraisal must be done no earlier than 60 days before the donation and completed by the return’s due date, including extensions.¹³ A qualified appraiser needs verifiable education and experience in the specific property type and cannot be the donor, the charity, or anyone related to either. The charity also signs Section B of Form 8283 to acknowledge receipt.

Publicly traded securities are exempt from the appraisal requirement regardless of value. Vehicles, intellectual property, and certain inventory have separate rules that override the general $5,000 threshold.

Quid Pro Quo Gifts

When you donate and receive something back, like a gala dinner, concert tickets, or a gift basket, only the amount above the value of what you received is deductible. If your total payment tops $75, the charity must give you a written disclosure estimating the value of the goods or services it provided.¹⁴

Reporting on Form 8283

Form 8283 has two sections. Section A covers property where you claim $5,000 or less per item or group of similar items, plus all publicly traded securities regardless of value. You list the property description, donation date, how you acquired it, your cost basis, and the claimed FMV.⁹

Section B covers property exceeding $5,000 per item or group, excluding publicly traded securities, vehicles reported on Form 1098-C, and certain inventory. It requires the full qualified appraisal details, the appraiser’s name, taxpayer identification number, and qualifications, plus the charity’s signature acknowledging receipt.⁹ Filing without the form when required, or without the charity’s signature on Section B, can cost you the entire deduction on examination.

Penalties for Overvaluing Donations

The IRS takes valuation seriously, and the penalties for inflating property values are steep.

Substantial valuation misstatement: Claiming a value 150% or more of the correct amount triggers a penalty of 20% of the tax underpayment.¹⁵
Gross valuation misstatement: Claiming 200% or more of the correct value doubles the penalty to 40% of the underpayment.¹⁵

These penalties apply only when the underpayment attributable to the misstatement exceeds $5,000 ($10,000 for corporations). A reasonable cause defense exists for the 20% penalty if you can show good-faith reliance on a qualified appraisal, but there is no disclosure exception; flagging the valuation on your return does not shield you.¹⁶ For the 40% gross misstatement penalty, reasonable cause is much harder to establish. Getting the appraisal right the first time costs far less than defending the number later.

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Office of the Law Revision Counsel. 26 US Code 170 – Charitable, Etc., Contributions and Gifts
3
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
4
Internal Revenue Service. Publication 561 – Determining the Value of Donated Property
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Office of the Law Revision Counsel. 26 US Code 1014 – Basis of Property Acquired From a Decedent
6
Office of the Law Revision Counsel. 26 US Code 1015 – Basis of Property Acquired by Gifts and Transfers in Trust
7
Internal Revenue Service. Publication 526 – Charitable Contributions
8
Internal Revenue Service. Instructions for Form 1098-C – Contributions of Motor Vehicles, Boats, and Airplanes
9
Internal Revenue Service. IRS Form 8283 – Noncash Charitable Contributions
10
Internal Revenue Service. Frequently Asked Questions on Virtual Currency Transactions
11
eCFR. 26 CFR 1.170A-7 – Contributions Not in Trust of Partial Interests in Property
12
Internal Revenue Service. Charitable Contributions Written Acknowledgments
13
Internal Revenue Service. Instructions for Form 8283
14
Internal Revenue Service. Charitable Contributions – Quid Pro Quo Contributions
15
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments
16
eCFR. 26 CFR 1.6662-5 – Substantial and Gross Valuation Misstatements Under Chapter 1