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Deductions for Old Computers: Prove It

Instead of tossing out your old computer equipment, such as personal computers and printers, you might donate the property to a charitable organization. If you qualify, you can deduct the full fair-market value of the equipment. However, if you do not have the necessary proof in hand, you are not entitled to a deduction.

New case: A taxpayer claimed deductions for donations of used computer equipment, software and office equipment exceeding $40,000 over two tax years. However, the taxpayer neither provided any written proof of the contributions nor did he attempt to verify the identity of the donees.

For the third tax year in question, the taxpayer produced a receipt for donations totaling more than $15,000, but the receipt did not describe the property contributed or its location. Furthermore, even if the receipt had been valid, the taxpayer did not substantiate the identity of the donee organization or obtain the written appraisal required for non-cash contributions over $5,000. Result: The Tax Court denied the deductions.

Note: You will have to pay a fee to obtain an independent appraisal, but it is usually well worth it. The appraisal itself is deductible as a miscellaneous expense. Miscellaneous expenses can be deducted to the extent your annual total exceeds 2% of your adjusted gross income.

 

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