Income Tax deduction question: For example, If donate an item that is worth $15 to a non profit...?

Question

Organization but I received it for free, is that still a $15 deduction on my taxes?

Example 2: Lets say I buy something from Wal-Mart and pay $15 because it is on sale but next week the price goes back up to $30 (regular price), could call that a $30 write-off even though I paid $15?

Ofcourse bith examples are assuming I donated the item to a qualifying non profit.

I appreciate the answers and I do agree with all of you but lets say I win a car worth $40,000 and donate it. Just because I paid nothing for it doesn't mean I should get a $0 deduction

Answer 1

For most things it's the lessor of your cost of Fair Market Value, so if your cost was nothing, then that's it's donated value for you. And with example 2, it's the $15 (the price you paid). And of course both examples are assuming that you itemize. If you take standard deduction you get no benefit.

Answer 2

You can'd deduct more than your basis, so on yourr first example there would be no deduction since you got the item for free. In your second example your deduction would be the $15 you actually paid for the item assuming it's fair market value at the time of the donation is at least that much - if it's less for the item in used condition, then that lower value would be your allowable deduction.

Answer 3

Your deduction is the lower of cost or fair market value.

Example 1: Cost = $0, FMV = $15 therefore Deduction = $0

Example 2: Cost = $15, FMV = $30 therefore Deduction = $15

Answer 4

With the exception of collectibles the allowed deduction is the smaller of the basis (cost) or Fair Market Value (MFV).a

Answer 5

The way the law reads is fair market value or you basis (meaning what you paid for it). Which ever is lower.

However, there are exceptions to this rule...such as collectibles that are expected to gain value...Usually this means art or coins or something such as those. I don't think anything you buy from Walmart would meet this mark.