Ordinarily, a donor who gives personal property, such as a quilt, computer or other things, to a charity may deduct the lesser of fair market value or tax basis, usually the donor’s cost. If the charity will use the property in fulfilling its charitable mission (such as displaying the quilt in the museum’s collection and not simply selling it and using the proceeds), and if the property has been held for more than a year and appreciated in value, the donor (other than a donor who made the quilts) may deduct the full fair market value.  A donor of the quilts who made the quilts may deduct only the cost basis even if the quilts will be used in the program of the recipient charity.

For any gift of personal property worth more than $500, the donor must obtain and file a copy of Form 8283 with the tax return on which the deduction is claimed. For property worth more than $5000, the donor must obtain an independent appraisal to include on the form. (See Ready Reference Page: IRS Requires Substantiation of Contributions)