IRS Publication 561 — Determining the Value of Donated Property
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“Disallowance of deductions for certain con- servation contributions by partnerships or S corporations. Subject to three exceptions, if you are an ultimate member of a partnership or an S corporation and the amount of the part- nership’s or S corporation’s qualified conserva- tion contribution exceeds 2.5 times the sum of each ultimate member’s relevant basis, the con- tribution is not treated as …”
2 Publication 561 (12-2025)
Sales of Comparable Properties The sales prices of properties similar to the donated property are often important in determining the FMV . The weight to be given to each sale depends on the following.
• The degree of similarity between the property sold and the donated property.
• The time of the sale—whether it was close to the valuation date.
• The circumstances of the sale—whether it was at arm’s-length with a knowledgeable buyer and seller, with neither having to act.
• Whether the comparable sale is from the same market area as the donated property.
• The conditions of the market in which the sale was made—whether unusually inflated or deflated. The comparable sales method of valuing real estate is explained later under Valuation of Various Kinds of Property. Example 1. Martha Black, who is not a book dealer, paid a promoter $10,000 for 500 copies of a single edition of a modern translation of a religious book. The promoter had claimed that the price was considerably less than the “retail” price and gave Martha a statement that the books had a total retail value of $30,000. The promoter advised that if Martha kept the books for more than 1 year and then gave them to a qualified organization, Martha could claim a charitable contribution deduction for the “retail” price of $30,000. Thirteen months later, all the books were given to a house of worship from a list provided by the promoter. At the time of the donation, wholesale dealers were selling similar quantities of books to the general public for $10,000.
Because Martha was not a dealer, she could not sell the books for their retail value. The FMV of the books is $10,000, the price at which similar quantities of books were being sold to the general public by wholesale dealers at the time of the contribution.
Example 2. The facts are the same as in Example 1, except that the promoter gave Martha Black a second option. The promoter said that if Martha wanted a charitable contribution deduction within 1 year of the purchase, Martha could buy the 500 books at the “retail” price of $30,000, paying only $10,000 in cash and giving a promissory note for the remaining $20,000. The principal and interest on the note would not be due for 12 years. According to the promoter, Martha could then, within 1 year of the purchase, give the books to a qualified organization and claim the full $30,000 retail price as a charitable contribution. Martha purchased the books under the second option and, 3 months later, gave them to a house of worship, which will use the books for religious purposes. At the time of the gift, the promoter was selling similar lots of books for either $10,000 or $30,000. The difference between the two prices was solely at the discretion of the buyer. The promoter was a willing seller for $10,000.
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