Not-for-profits often struggle with valuing noncash and in-kind donations. Although the amount that a donor can deduct generally is based on the donation’s fair market value (FMV), there’s no single formula for calculating it. FMV is the price that property would sell for on the open market. There are three particularly relevant FMV factors: 1) original cost or selling price of the donated item, 2) sales price of property similar to the donated item and 3) replacement cost.
The IRS has clarified that state tax credit programs, to which businesses can make payments in exchange for credits against various taxes, aren’t affected by the recent proposed regulations targeting state and local tax (SALT) limit workarounds. That’s true as long as the taxes are deductible under other code sections. These taxes include insurance premium tax, direct pay sales and use tax, corporate income tax and alcohol excise tax. Proposed IRS regs target SALT limit workarounds implemented in some high-tax states.