Can a taxpayer deduct the cost of items purchased to benefit a charitable organization?

The correct answer indicates that a taxpayer can deduct only the amount paid over the value of the item when donating items to a charitable organization. This is based on the IRS guidelines that specify that when a taxpayer donates items, they can claim a deduction only for the fair market value above what they paid for the items, or the price they would have received if they sold the items instead.

For example, if someone purchases a chair for $100 and donates it to a charity, the fair market value of that chair at the time of donation may be only $60. In this case, the taxpayer cannot deduct the entire purchase price but would only be able to deduct the amount that exceeds the fair market value, essentially zero in this scenario, as the fair market value is lower than what was paid.

This concept reinforces the idea that charitable contributions must be substantiated with proper documentation and that the deduction is limited to the value received from the charity in return for the donation. Therefore, when making charitable donations, being aware of fair market value is crucial for determining the correct deduction amount.