Q & A: Will an artist's donation to a church gift store send her to tax hell?

The rules can get a bit complex, but we can boil them down to a few core principles:

• If the value of the item is less than or equal to what the item cost, you can deduct the value.
  
• If the value of the item is more than what the item cost and you've had the item for a year or less, you can deduct the cost but not the increase in value.
  
• If the value of the item is more than what the item cost and you've had the item for more than a year, you can deduct the full value so long as you and the charity follow certain rules.

What are the rules that apply to the third point?  There are a bunch, but I want to highlight a couple in particular that apply to donations of tangible personal property, such as artwork, books, clothes, furniture and cars.

• If the item used for something other than the charity's exempt purpose, you can deduct only the item's cost, not the increase in value.
  
• If the item is valued at more than $5000 and the charity sells it within three years, the donor will have to pay tax on the previously deducted increase in value IF the charity does not certify on Form 8282 that the item had been put to an exempt use or that the intended exempt use had become impossible or unfeasible.  (For a helpful example, click here.) 
  
• Form 1098-C must be filled out for a donation of a car, boat or plane.