How long must you keep an in-kind gift?

Summary:

There is no time limit, but if a large gift is disposed of within two years, there is a form that must be filed with the IRS.

Michael Williamson wrote in CharityLaw on May 29, 1999:
Could someone gift me a brief synopsis
on the IRS ruling regarding how long a
501(C)3 must keep an in-kind
contribution of equipment.
specifically, if a donor gives and
automobile, how long do we have to hold
that gift.

Reply:
There is no requirement that you hold it for a specific amount of time.

If the property was appraised at $5000 or more and you signed Form 8283 (the
apprasial summary) and if you dispose of the property within two years, then you
must file Form 8282 with the IRS within 125 days of disposition and give a copy to
the donor.

See http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p5570205.htm

Laura Peebles added:
There are two other issues to think about here:

1. The IRS has publicly announced that it will be targeting certain
charities that are advertising for used cars. In certain cases they appear
to be running "used car sales lots" and/or have agreements with junkyards.
The charities have been implying that the donor could deduct the Blue Book
value rather than the true Fair Market Value (FMV) of some very used cars.

2. If the donor has given you appreciated personal property (rather than
*depreciated* property--which covers most cars) you must actually use the
property as part of your exempt function for the donor to be entitled to a
deduction for FMV rather than their cost. Put another way--donate a painting
to a museum, get a FMV deduction. Donate to your high school auction, get a
donation for cost only. (Note that Goodwill and similar charities actually
use the donated property to train and rehabilitate the people who work there.)

Sharon M. Kelly (skelly@hodgsonruss.com) added:
Re: the UBIT issue, I would say income from sale of refurbished cars is NOT subject
to UBIT. Work on the cars by students of automotive repair etc. would be
substantially related to the college's exempt purpose of education. There is a
provision somewhere in the UBIT regs. that says income from sale of a product is not
UBIT if producing the product is a related activity (unless the scale of production
exceeds that needed to accomplish the exempt purpose). Where an organization's
exempt purpose includes education and training, many activities that might otherwise
generate UBIT can be treated as related, e.g. items manufactured as part of exempt
training, catering services provided by an exempt entity involved in culinary job
training, etc.