Rock 'n Roll Tax Deductions

Rock 'n Roll Tax Deductions

by Heleigh Bostwick, December 2009

October marks the 25th anniversary of the Rock and Roll Hall of Fame & Museum. In addition to recognizing contributions that rock 'n roll legends from Chuck Berry to Janis Joplin and The Clash have made to the genre, it's also a repository of rock 'n roll memorabilia. Some of that memorabilia is on temporary loan (Janis Joplin's psychedelic Porsche for one), while others, including Johnny Cash's tour bus have been donated to the museum.

What many people might not realize is that the museum is part of the Rock and Roll Hall of Fame Foundation, a 501(c) organization—otherwise known as a non-profit. As such, when someone decides to donate say, Johnny Cash's tour bus to the Rock and Roll Hall of Fame, there are significant tax advantages. While you might not have any donations for the Rock and Roll Hall of Fame, you just might have something that could help another institution. Here are some things to keep in mind when considering a donation to a charitable organization.

IRS Regulations: Cash vs. Non-Cash Donations

Many people are aware that cash donations to charitable organizations such as the American Heart Society or the Humane Society are deductible on tax returns. When you donate property however, there is a different set of IRS regulations that must be adhered to, by both the donor and the nonprofit organization that receives the donation.

Personal Property Defined

The IRS refers to personal property that is donated as a tangible asset. Non-profits often refer to these donations as gifts-in-kind or in-kind donations since they are non-cash contributions. Tangible assets include physical property or items such as antiques, collections, and artwork. For the Hall of Fame, these donations include the Janis Joplin "undipped blotter acid sheet," clothing such as the velvet stage outfit worn by The Who's Keith Moon, and Fats Domino's stage shirt, donated by the entertainer himself.

Qualified Organizations

The organization must be a "qualified organization" whose mission falls under one of the following five categories: Religious, Charitable, Educational, Scientific, Literary, Abuse prevention (includes children or animals), and certain others as specified in the IRS regulations.

Relevance to the Organization's Mission

The donation must be something that contributes to the mission of the organization and cannot be sold or traded once the institution receives it. For the Rock and Roll Hall of Fame & Museum, it would include any rock 'n roll memorabilia from a ticket to an Everly Brothers concert to a Jimi Hendrix concert poster-anything that relates to the core mission statement of the organization.

Fair Market Value

The IRS states that the value of gifts or property donated to a qualified organization is based on the fair market value (FMV) of the property at the time of the contribution provided the property has been owned for at least one year. The fair market value is the amount that the taxpayer can deduct on his tax return. Fair market value is determined by what a buyer would pay a seller for the property under current market conditions.

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