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the donation does not further restrict how the property
<br />can be used.
<br />The FMV of a conservation easement cannot be
<br />determined by applying a standard percentage to the
<br />FMV of the underlying property. The best evidence of the
<br />FMV of an easement is the sales price of a comparable
<br />easement, If there are no comparable sales, the before
<br />and after method may be used.
<br />Attach a statement that:
<br />• Identifies the conservation purposes furthered by your
<br />donation,
<br />• Shows, if before and after valuation is used, the FMV
<br />of the underlying property before and after the gift,
<br />• States whether you made the donation in order to get a
<br />permit or other approval from a local or other governing
<br />authority and whether the donation was required by a
<br />contract, and
<br />• If you or a related person has any interest in other
<br />property nearby, describes that interest.
<br />If an appraisal is required, it must include the method
<br />of valuation (such as the income approach or the market
<br />data approach) and the specific basis for the valuation
<br />(such as specific comparable sales transactions).
<br />Easements on buildings in historic districts. You
<br />cannot claim a deduction for this type of contribution
<br />made after July 25, 2006, unless the contributed interest
<br />includes restrictions preserving the entire exterior of the
<br />building (including front, sides, rear, and height) and
<br />prohibiting any change to the exterior of the building
<br />inconsistent with its historical character. If you claim a
<br />deduction for this type of contribution in a tax year
<br />beginning after August 17, 2006, you must include with
<br />your return:
<br />• A qualified appraisal,
<br />• Photographs of the entire exterior of the building, and
<br />• A description of all restrictions on the development of
<br />the building.
<br />If you donate this type of property after February 12,
<br />2007, and claim a deduction of more than $10,000, your
<br />deduction will not be allowed unless you pay a $500 filing
<br />fee. See Form 8283 -V and its instructions (available by
<br />March 2007).
<br />For more information about qualified conservation
<br />contributions, see Pub. 526 and Pub. 561, Determining
<br />the Value of Donated Property. Also see section 170(h),
<br />Regulations section 1.170A -14, and Notice 2004 -41.
<br />Notice 2004 -41, 2004 -28 I.R.B. 31, is available at
<br />www.irs.gov/irb/2004-28 IRB/ar09. html.
<br />Intellectual property. The FMV of intellectual property
<br />must be reduced to figure the amount of your deduction,
<br />as explained on page 2. Intellectual property means a
<br />patent, copyright (other than a copyright described in
<br />section 1221(a)(3) or 1231(b)(1)(C)), trademark, trade
<br />name, trade secret, know -how, software (other than
<br />software described in section 197(e)(3)(A)(i)), or similar
<br />property, or applications or registrations of such property.
<br />However, you may be able to claim additional
<br />charitable contribution deductions in the year of the
<br />contribution and later years based on a percentage of the
<br />donee's net income, if any, from the property. The
<br />amount of the donee's net income from the property will
<br />be reported to you on Form 8899, Notice of Income From
<br />Donated Intellectual Property. See Pub. 526 for details.
<br />Clothing and household items. The FMV of used
<br />household items and clothing is usually much lower than
<br />when new. A good measure of value might be the price
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<br />that buyers of these used items actually pay in
<br />consignment or thrift shops. You can also review
<br />classified ads in the newspaper or on the Internet to see
<br />what similar products sell for.
<br />You cannot claim a deduction for clothing or
<br />household items you donate after August 17, 2006,
<br />unless the clothing or household items are in good used
<br />condition or better. However, you can claim a deduction
<br />for a contribution of an item of clothing or household item
<br />that is not in good used condition or better if you deduct
<br />more than $500 for it and include a qualified appraisal of
<br />it with your return.
<br />Qualified Vehicle Donations
<br />A qualified vehicle is any motor vehicle manufactured
<br />primarily for use on public streets, roads, and highways;
<br />a boat; or an airplane. However, property held by the
<br />donor primarily for sale to customers, such as inventory
<br />of a car dealer, is not a qualified vehicle.
<br />If you donate a qualified vehicle with a claimed value
<br />of more than $500, you cannot claim a deduction unless
<br />you attach to your return a copy of the contemporaneous
<br />written acknowledgment you received from the donee
<br />organization. The donee organization may use Copy B of
<br />Form 1098 -C as the acknowledgment. An
<br />acknowledgment is considered contemporaneous if the
<br />donee organization furnishes it to you no later than 30
<br />days after the:
<br />• Date of the sale, if the vehicle was sold in an arm's
<br />length transaction to an unrelated party, or
<br />• Date of the contribution, if the vehicle will not be sold
<br />by the donee organization before completion of a
<br />material improvement or significant intervening use, or
<br />the vehicle will be given or sold to a needy individual for a
<br />price significantly below FMV in direct furtherance of the
<br />organization's charitable purpose of relieving the poor
<br />and distressed or underprivileged who are in need of a
<br />means of transportation.
<br />For a donated vehicle with a claimed value of more
<br />than $500, you can deduct the smaller of the vehicle's
<br />FMV on the date of the contribution or the gross
<br />proceeds received from the sale of the vehicle, unless an
<br />exception applies as explained below. Form 1098 -C (or
<br />other acknowledgment) will show the gross proceeds
<br />from the sale if no exception applies. If the FMV of the
<br />vehicle was more than your cost or other basis, you may
<br />have to reduce the FMV to figure the deductible amount,
<br />as described under Reductions to FMV on page 2.
<br />If any of the following exceptions apply, your deduction
<br />is not limited to the gross proceeds received from the
<br />sale. Instead, you generally can deduct the vehicle's
<br />FMV on the date of the contribution if the donee
<br />organization:
<br />• Makes a significant intervening use of the vehicle
<br />before transferring it,
<br />• Makes a material improvement to the vehicle before
<br />transferring it, or
<br />• Gives or sells the vehicle to a needy individual for a
<br />price significantly below FMV in direct furtherance of the
<br />organization's charitable purpose of relieving the poor
<br />and distressed or underprivileged who are in need of a
<br />means of transportation.
<br />Form 1098 -C (or other acknowledgment) will show if
<br />any of these exceptions apply. If the FMV of the vehicle
<br />was more than your cost or other basis, you may have to
<br />reduce the FMV to figure the deductible amount, as
<br />described under Reductions to FMV on page 2.
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