Tangible Personal Property

As with gifts of long-term capital-gain securities or real estate, you are entitled to a charitable deduction for a gift of long-term capital-gain tangible personal property such as works of art, rare books, and stamp or coin collections not created by the donor. (Note: The top capital-gain tax rate on such assets is 28%.) How much you can deduct depends on the so-called standard of “related use.”

Here is how the standard is applied: If the use of the contributed property is related to the exempt purposes of a charity (e.g., a painting to a museum or rare books to a library), you are entitled to a charitable income-tax deduction for the fair-market value of the property.

If the use of the contributed property is unrelated to the exempt purposes of the charity (e.g., stamp collection to University of Chattanooga Foundation to sell and use the proceeds), you are entitled to a charitable deduction for your basis in the property.

A donor who contributes a work of art that the donor created is limited to the actual cost of producing the work for the charitable deduction.

Tangible Property	Related Use	Unrelated Use
Fair-Market Value Cost Basis Charitable Deduction Actual Tax Savings (24%)	$20,000 $ 5,000 $20,000 $ 4,800	$20,000 $ 5,000 $ 5,000 $ 1,200

The University of Chattanooga Foundation exists as a repository for gifts aimed at benefiting the University of Tennessee at Chattanooga.