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for educational purposes by being placed in its library for display and study by art students, the use isn't an unrelated use. But if the painting is sold and the proceeds are used by the organi- zation for educational purposes, the use is an unrelated use. Deduction limited. Your deduction for a contribution of tangible personal property may be limited. See (5) under Exceptions, earlier. Recapture if no exempt use. You must re- capture part of your charitable contribution de- duction by including it in your income if all the following statements are true. 1. You donate tangible personal property with a claimed value of more than $5,000, and your deduction is more than your ba- sis in the property. 2. The organization sells, trades, or other- wise disposes of the property after the year it was contributed but within 3 years of the contribution. 3. The organization doesn't provide a written statement (such as on Form 8282, Part IV), signed by an officer of the organiza- tion under penalty of perjury, that either: a. Certifies its use of the property was substantial and related to the organi- zation's purpose, or b. Certifies its intended use of the prop- erty became impossible. If all the preceding statements are true, in- clude in your income: 1. The deduction you claimed for the prop- erty, minus 2. Your basis in the property when you made the contribution. Include this amount in your income for the year the qualified organization disposes of the prop- erty. Report the recaptured amount on Sched- ule 1 (Form 1040), line 8z. Ordinary or capital gain income included in gross income. You don't reduce your charita- ble contribution if you include the ordinary or capital gain income in your gross income in the same year as the contribution. This may hap- pen when you transfer installment or discount obligations or when you assign income to a qualified organization. If you contribute an obli- gation received in a sale of property that is re- ported under the installment method, see Pub. 537, Installment Sales. Example. You donate an installment note to a qualified organization. The note has a fair market value of $10,000 and a basis to you of $7,000. As a result of the donation, you have a short-term capital gain of $3,000 ($10,000 − $7,000), which you include in your income for the year. Your charitable contribution is $10,000. Food Inventory Special rules apply to certain donations of food inventory to a qualified organization. These rules apply if all the following conditions are met. 1. You made a contribution of apparently wholesome food from your trade or busi- ness. Apparently wholesome food is food intended for human consumption that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appear- ance, age, freshness, grade, size, surplus, or other conditions. 2. The food is to be used only for the care of the ill, the needy, or infants. 3. The use of the food is related to the organ- ization's exempt purpose or function. 4. The organization doesn't transfer the food for money, other property, or services. 5. You receive a written statement from the organization stating it will comply with re- quirements (2), (3), and (4). 6. The organization isn't a private nonoperat- ing foundation. 7. The food satisfies any applicable require- ments of the Federal Food, Drug, and Cosmetic Act and regulations on the date of transfer and for the previous 180 days. If all the conditions just described are met, use the following worksheet to figure your de- duction. Worksheet 1. Donations of Food Inventory See separate Worksheet instructions. (Keep for your records) 1. Enter fair market value of the donated food . . . . . . . . . . . . . . . . .

2. Enter basis of the donated food . . . . . . . . . . . . . . . . . . . . . . .

3. Subtract line 2 from line 1. If the result is zero or less, stop here. Don't complete the rest of this worksheet. Your charitable contribution deduction for food is the amount on line 1 . . . . . . . . . . . . . . .

4. Enter one-half of line 3 . . . . . . . . . .

5. Subtract line 4 from line 1 . . . . . . . .

6. Multiply line 2 by 2.0 . . . . . . . . . . . .

7. Subtract line 6 from line 5. If the result is less than zero, enter -0- . . . . . . . .

8. Add lines 4 and 7 . . . . . . . . . . . . . .

9. Compare line 3 and line 8. Enter the smaller amount . . . . . . . . . . . . . . .

10. Subtract line 9 from line 1 . . . . . . . .

11. Enter 25% of your total net income for the year from all trades or businesses from which food inventory was donated . . . . . . . . . .

12. Compare line 10 and line 11. Enter the smaller amount. This is your charitable contribution deduction for the food . . . . . . . . . . . . . . . . . .

Worksheet instructions. When determining the fair market value to enter on line 1 of the worksheet, take into account the price at which the same or substantially the same food items (as to both type and quality) were sold by you at the time of the contribution. Don’t reduce this amount because the food wasn’t or couldn’t be sold by reason of your internal standards, lack of market, or similar circumstances. Also, don’t reduce this amount even though you produced the food exclusively for the purpose of transfer- ring the food to a qualified organization. If you don’t account for inventories under section 471 and you aren’t required to capitalize indirect costs under section 263A, you may elect, solely for the purpose of line 2 of the worksheet, to treat the basis of any apparently wholesome food as being equal to 25% of the fair market value of such food. Enter on line 11 of the worksheet, 25% of your net income for the year from all sole pro- prietorships, S corporations, or partnerships (or other entity that isn't a C corporation) from which contributions of food inventory were made. Figure net income before any deduction for a charitable contribution of food inventory. If you made more than one contribution of food inventory, complete a separate worksheet for each contribution. Complete lines 11 and 12 on only one worksheet. On that worksheet, complete line 11. Then compare line 11 and the total of the line 10 amounts on all worksheets and enter the smaller of those amounts on line 12. If line 11 is smaller than line 10, you can carry over the excess as a qualifying food in- ventory contribution to the following year. You may be able to include the excess in your chari- table contribution deduction for the food in each of the next 5 years in order of time until it is used up, but not beyond that time. More information. See Inventory, earlier, for information about determining the basis of do- nated inventory and the effect on cost of goods sold. For additional details, see section 170(e) (3) of the Internal Revenue Code. Bargain Sales A bargain sale of property is a sale or exchange for less than the property's fair market value. A bargain sale to a qualified organization is partly a charitable contribution and partly a sale or ex- change. Part that is a sale or exchange. The part of the bargain sale that is a sale or exchange may result in a taxable gain. For more information on figuring the amount of any taxable gain, see Bargain sales to charity in chapter 1 of Pub. 544. Part that is a charitable contribution. Figure the amount of your charitable contribution in three steps. Step 1. Subtract the amount you received for the property from the property's fair market value at the time of sale. This gives you the fair market value of the contributed part. Step 2. Find the adjusted basis of the con- tributed part. It equals: Adjusted basis of entire property Fair market value of contributed part Fair market value of entire property  Publication 526 (2021) Page 13