If you are looking to donate something, you must know the pros and cons of donation and how the phenomenon is looked upon from the legal perspective. A donation can be defined as a gift that may be offered or given by physical as well as legal individual(s). You can donate for any charitable purpose as well as for a definite benefit of a cause. A donation can be of various forms, and may include cash, product or services, new as well as used goods. Goods may include clothing, various types of toys, foods, properties and vehicles. Donation may also be in the form of emergency, humanitarian or relief aid for meeting medical needs. This may include blood or various organs through transplantation. Charitable gifts in the form of services or cab are also regarded as donations in kind.
Now let us discuss various types of donations that you can choose.
Cash - This is literally, the most common variety of donation you can opt for. It is, as expected, the easiest one as well, for valuing. If you contribute through a cheque, it is deductible on that very year even if the cheque is encashed on the following year. However, you will not be able to enjoy a tax deduction if you do not maintain a bank record of your contribution that should include the charity name, contribution date and distribution amount.
Intangible Assets – When the stock market sees a boom, owners of sizeable treasured and intangible personal properties give out various types of charitable donations that may include securities. These gifts help these people to remove assets that are either appreciated or are taxable otherwise. While donating assets that are intangible, the value of the fair market on the very date when the donation was given is taken into account for determining the value of that donation in question.
Again, when we speak of charitable donations, they can be offered in various forms. Charitable donations do not necessarily need to be in cash. You can even donate goods and services as charitable donations. These are known as "in-kind" charitable donations. For these donations you can enjoy tax deduction though you will not be entitled to subtract the original cost of those objects which are involved in the donation. Only the "fair market cost or value" of the objects can be deducted. "Fair market cost or value" can be defined as the value that you would have got had you sold the items or objects in the market instead of donating them.
The tax situation may vary from people to people and this obviously has an effect on the deduction subject to the donations. However, if you need to be absolutely sure about the deductions you will be entitled when you donate, you need to consult a tax constant who will guide you through the process of donating so that you can enjoy maximum tax deduction.