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contribution deduction from your opening inven- tory. It isn't part of the cost of goods sold. If the cost of donated inventory isn't included in your opening inventory, the inventory's basis is zero and you can't claim a charitable contri- bution deduction. Treat the inventory's cost as you would ordinarily treat it under your method of accounting. For example, include the pur- chase price of inventory bought and donated in the same year in the cost of goods sold for that year. A special rule applies to certain donations of food inventory. See Food Inventory, later. Patents and Other Intellectual Property If you donate intellectual property to a qualified organization, your deduction is limited to the ba- sis of the property or the fair market value of the property, whichever is smaller. Intellectual prop- erty means any of the following. • Patents. • Copyrights (other than a copyright descri- bed in Internal Revenue Code sections 1221(a)(3) or 1231(b)(1)(C)). • Trademarks. • Trade names. • Trade secrets. • Know-how. • Software (other than software described in Internal Revenue Code section 197(e)(3) (A)(i)). • Other similar property or applications or registrations of such property. Additional deduction based on income. You may be able to claim additional charitable contribution deductions in the year of the contri- bution and years following, based on the in- come, if any, from the donated property. The following table shows the percentage of income from the property that you can deduct for each of your tax years ending on or after the date of the contribution. In the table, “tax year 1,” for example, means your first tax year end- ing on or after the date of the contribution. How- ever, you can take the additional deduction only to the extent the total of the amounts figured us- ing this table is more than the amount of the de- duction claimed for the original donation of the property. After the legal life of the intellectual property ends, or after the 10th anniversary of the dona- tion, whichever is earlier, no additional deduc- tion is allowed. The additional deductions can't be taken for intellectual property donated to certain private foundations. Tax year Deductible percentage 1 100% 2 100% 3 90% 4 80% 5 70% 6 60% 7 50% 8 40% 9 30% 10 20% 11 10% 12 10% Reporting requirements. You must inform the organization at the time of the donation that you intend to treat the donation as a contribu- tion subject to the provisions just discussed. The organization is required to file an infor- mation return showing the income from the property, with a copy to you. This is done on Form 8899, Notice of Income From Donated In- tellectual Property. Determining Fair Market Value This section discusses general guidelines for determining the fair market value of various types of donated property. Pub. 561 contains a more complete discussion. Fair market value is the price at which prop- erty would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Used clothing. The fair market value of used clothing and other personal items is usually far less than the price you paid for them. There are no fixed formulas or methods for finding the value of items of clothing. You should claim as the value the price that buyers of used items actually pay in used cloth- ing stores, such as consignment or thrift shops. Also see Clothing and Household Items, earlier. Example. Kristin donated a coat to a thrift store operated by her church. She paid $300 for the coat 3 years ago. Similar coats in the thrift store sell for $50. The fair market value of the coat is $50. Kristin's donation is limited to $50. Household items. The fair market value of used household items, such as furniture, appli- ances, and linens, is usually much lower than the price paid when new. These items may have little or no market value because they are in a worn condition, out of style, or no longer useful. For these reasons, formulas (such as using a percentage of the cost to buy a new re- placement item) aren't acceptable in determin- ing value. You should support your valuation with pho- tographs, canceled checks, receipts from your purchase of the items, or other evidence. Maga- zine or newspaper articles and photographs that describe the items and statements by the recipients of the items are also useful. Don't in- clude any of this evidence with your tax return. If the property is valuable because it is old or unique, see the discussion under Paintings, An- tiques, and Other Objects of Art in Pub. 561. Also see Clothing and Household Items, earlier. Article of clothing or household item over $500 not in good used condition. Form 8283, Section B, must be completed and the Form 8283 attached to the tax return if you are contributing a single article of clothing or house- hold item over $500 that is not in good used condition. See the Form 8283 instructions for more information. Cars, boats, and airplanes. If you contribute a car, boat, or airplane to a qualified organiza- tion, you must determine its fair market value. Qualified vehicle donation. You don’t need a written appraisal for a qualified vehi- cle — such as a car, boat, or airplane — if your deduction for the qualified vehicle is limited to the gross proceeds from its sale and you ob- tained a contemporaneous written acknowl- edgement (defined later). If you donate a quali- fied vehicle with a claimed value of more than $500, you can’t claim a deduction unless you attach to Form 8283 a copy of the contempora- neous written acknowledgement you received from the donee organization. See Qualified Ve- hicle Donations in the Instructions for Form 8283. Boats. Except for small, inexpensive boats, the valuation of boats should be based on an appraisal by a marine surveyor or appraiser be- cause the physical condition is critical to the value. Cars. Certain commercial firms and trade organizations publish used car pricing guides, commonly called “blue books,” containing com- plete dealer sale prices or dealer average pri- ces for recent model years. The guides may be published monthly or seasonally, and for differ- ent regions of the country. These guides also provide estimates for adjusting for unusual equipment, unusual mileage, and physical con- dition. The prices aren't “official” and these pub- lications aren't considered an appraisal of any specific donated property. But they do provide clues for making an appraisal and suggest rela- tive prices for comparison with current sales and offerings in your area. These publications are sometimes available from public libraries, or from the loan officer at a bank, credit union, or finance company. You can also find used car pricing information on the Internet. To find the fair market value of a donated car, use the price listed in a used car guide for a private party sale, not the dealer retail value. However, the fair market value may be less if the car has engine trouble, body damage, high mileage, or any type of excessive wear. The fair market value of a donated car is the same as the price listed in a used car guide for a private party sale only if the guide lists a sales price for a car that is the same make, model, and year, sold in the same area, in the same condition, with the same or similar options or accessories, Publication 526 (2021) Page 11