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and with the same or similar warranties as the donated car. Example. You donate a used car in poor condition to a local high school for use by stu- dents studying car repair. A used car guide shows the dealer retail value for this type of car in poor condition is $1,600. However, the guide shows the price for a private party sale of the car is only $750. The fair market value of the car is considered to be $750. Large quantities. If you contribute a large number of the same item, fair market value is the price at which comparable numbers of the item are being sold. Example. You purchase 500 bibles for $1,000. The person who sells them to you says the retail value of these bibles is $3,000. If you contribute the bibles to a qualified organization, you can claim a deduction only for the price at which similar numbers of the same bible are currently being sold. Your charitable contribu- tion is $1,000, unless you can show that similar numbers of that bible were selling at a different price at the time of the contribution. Giving Property That Has Decreased in Value If you contribute property with a fair market value that is less than your basis in it, your de- duction is limited to its fair market value. You can't claim a deduction for the difference be- tween the property's basis and its fair market value. Your basis in property is generally what you paid for it. If you need more information about basis, see Pub. 551, Basis of Assets. You may want to see Pub. 551 if you contribute property that you: • Received as a gift or inheritance; • Used in a trade, business, or activity con- ducted for profit; or • Claimed a casualty loss deduction for. Common examples of property that de- crease in value include clothing, furniture, appli- ances, and cars. Giving Property That Has Increased in Value If you contribute property with a fair market value that is more than your basis in it, you may have to reduce the fair market value by the amount of appreciation (increase in value) when you figure your deduction. Your basis in property is generally what you paid for it. If you need more information about basis, see Pub. 551. Different rules apply to figuring your deduc- tion, depending on whether the property is: • Ordinary income property, or • Capital gain property. Ordinary Income Property Property is ordinary income property if you would have recognized ordinary income or short-term capital gain had you sold it at fair market value on the date it was contributed. Ex- amples of ordinary income property are inven- tory, works of art created by the donor, manu- scripts prepared by the donor, and capital assets (defined later, under Capital Gain Prop- erty) held 1 year or less. Property used in a trade or business. Property used in a trade or business is consid- ered ordinary income property to the extent of any gain that would have been treated as ordi- nary income because of depreciation had the property been sold at its fair market value at the time of contribution. See chapter 3 of Pub. 544, Sales and Other Dispositions of Assets, for the kinds of property to which this rule applies. Amount of deduction. The amount you can deduct for a contribution of ordinary income property is its fair market value minus the amount that would be ordinary income or short-term capital gain if you sold the property for its fair market value. Generally, this rule lim- its the deduction to your basis in the property. Example. You donate stock you held for 5 months to your church. The fair market value of the stock on the day you donate it is $1,000, but you paid only $800 (your basis). Because the $200 of appreciation would be short-term capi- tal gain if you sold the stock, your deduction is limited to $800 (fair market value minus the ap- preciation). Exception. Don't reduce your charitable contribution if you include the ordinary or capital gain income in your gross income in the same year as the contribution. See Ordinary or capital gain income included in gross income under Capital Gain Property next, if you need more in- formation. Capital Gain Property Property is capital gain property if you would have recognized long-term capital gain had you sold it at fair market value on the date of the contribution. Capital gain property includes cap- ital assets held more than 1 year. Capital assets. Capital assets include most items of property you own and use for personal purposes or investment. Examples of capital assets are stocks, bonds, jewelry, coin or stamp collections, and cars or furniture used for per- sonal purposes. For purposes of figuring your charitable con- tribution, capital assets also include certain real property and depreciable property used in your trade or business and, generally, held more than 1 year. You may, however, have to treat this property as partly ordinary income property and partly capital gain property. See Property used in a trade or business under Ordinary In- come Property, earlier. Real property. Real property is land and generally anything built on, growing on, or at- tached to land. Depreciable property. Depreciable prop- erty is property used in business or held for the production of income and for which a deprecia- tion deduction is allowed. For more information about what is a capital asset, see chapter 2 of Pub. 544. Amount of deduction—General rule. When figuring your deduction for a contribution of cap- ital gain property, you can generally use the fair market value of the property. Exceptions. However, in certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair mar- ket value. Generally, this means reducing the fair market value to the property's cost or other basis. You must do this if: 1. The property (other than qualified appreci- ated stock) is contributed to certain private nonoperating foundations, 2. You choose the 50% limit instead of the 30% limit for capital gain property given to 50% limit organizations, discussed later, 3. The contributed property is intellectual property (as defined earlier under Patents and Other Intellectual Property), 4. The contributed property is certain taxi- dermy property, as explained earlier, or 5. The contributed property is tangible per- sonal property (defined earlier) that: a. Is put to an unrelated use (defined later) by the charity, or b. Has a claimed value of more than $5,000 and is sold, traded, or other- wise disposed of by the qualified or- ganization during the year in which you made the contribution, and the qualified organization hasn't made the required certification of exempt use (such as on Form 8282, Donee Infor- mation Return, Part IV). See also Re- capture if no exempt use, later. Contributions to private nonoperating foun- dations. The reduced deduction applies to contributions to all private nonoperating founda- tions other than those qualifying for the 50% limit, discussed later. However, the reduced deduction doesn't ap- ply to contributions of qualified appreciated stock. Qualified appreciated stock is any stock in a corporation that is capital gain property and for which market quotations are readily availa- ble on an established securities market on the day of the contribution. But stock in a corpora- tion doesn't count as qualified appreciated stock to the extent you and your family contrib- uted more than 10% of the value of all the out- standing stock in the corporation. Tangible personal property put to unrelated use. Tangible personal property is defined ear- lier under Future Interest in Tangible Personal Property. Unrelated use. The term “unrelated use” means a use unrelated to the exempt purpose or function of the qualified organization. For a governmental unit, it means the use of the con- tributed property for other than exclusively pub- lic purposes. Example. If a painting contributed to an ed- ucational institution is used by that organization Page 12 Publication 526 (2021)