Members of the Maryland Association of Certified Public...

Tax answers

March 18, 1996

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: What type of documentation do you need to deduct noncash contributions, such as large bags of clothing to Goodwill?

A: You must keep a list of what you gave, showing the fair market value of the items and, generally, you must have a written receipt. Visit a thrift shop to see what comparable merchandise actually sells for this is fair market value. You aren't expected to get a receipt for clothing of minimal value left at an unattended collection point. However, you must still maintain your own detailed and dated list of donated items and the name and address of the charity. If the total is at least $250, you must get a written acknowledgment from the charity in order to take the deduction. If the total fair market value of all your noncash donations during the year is more than $500, you need to state how and when you got it and what it originally cost you (some people reach this level by donating designer clothes or a used car). If the value of your donation is more than $5,000, you must have a written appraisal of the property from a qualified appraiser to attach to your return. You may have to report your noncash contributions on Form 8823, depending on the type and amount of donated property.

Q: If I get retirement in the form of half a year's pay, can I average that on a five- or 10-year average spread?

A: Not unless it's a distribution of your entire balance from the employer's IRS-qualified pension or profit-sharing plans. If your employer is (generously) giving you a half a year's pay upon your retirement because you do not have any other formal retirement benefits, the lump sum is like severance pay reportable and taxable in the year you receive it.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

A joint service from The Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15. To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Using a touch-tone phone, enter 6225 after you hear the greeting.

Callers are asked to leave their names and phone numbers, should questions need to be clarified. Selected questions will be answered in the Business section. No questions will be answered by phone.

Pub Date: 3/18/96

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