Donating wine- how to calculate tax deduction?

[Howard_Cooper]

Good thing I got so many wines that aren’t worth what I paid for them.

Talk to your tax advisor but I think the actual rule is FMV but no more than cost.

[MattBerto]

Good thing I got so many wines that aren’t worth what I paid for them.

Talk to your tax advisor but I think the actual rule is FMV but no more than cost.

My tax advisor said to stop buying so much sh1tty wine.

[Howard_Cooper]

Good thing I got so many wines that aren’t worth what I paid for them.

Talk to your tax advisor but I think the actual rule is FMV but no more than cost.

My tax advisor said to stop buying so much sh1tty wine.

Seems like good advice. What kinda of wine are you buying that do down in value?

[MattBerto]

Seems like good advice. What kinda of wine are you buying that do down in value?

I got all this Bordeaux I bought about 10 years ago - I’m sure it’s gone bad by now.

[Jason_T]

I’d guess that outside of a handful of wines, most wines are “worth” less than their cost, especially in the short to medium term. The market for most wines is thin, and the friction quite high.

And when I say “handful” I mean the obvious candidates - high end Bordeaux, Burgundy, Champagne, Rhône’s, Barolo, cult Cali’s etc. But that’s a tiny, tiny fraction of the wine out there.

I think if most of us had to liquidate our collection in a short time frame we’d take a bath. That to me implies the wines are worth less than their cost.

[Chris_Seiber]

Good thing I got so many wines that aren’t worth what I paid for them.

Indeed. I’m going to be donating a “Goopy High Scoring Australian Shiraz from the early 2000s” tasting the next time around.

Joking aside, it would be a good reason not to pick appreciated wines for donations and donated tasting events. Yet another market-distorting behavior encouraged by the tax code, such as elderly people hanging onto appreciated stocks and real estate to their deaths, so they can get a stepped up basis through inheritance.

[Howard_Cooper]

Seems like good advice. What kinda of wine are you buying that do down in value?

I got all this Bordeaux I bought about 10 years ago - I’m sure it’s gone bad by now.

???

[Chris_Seiber]

2. Is tax/shipping deductible for wine value
3. What records/appraisals are required? I have screen shots of each bottle’s price from Wine-Searcher Pro

Can anyone respond on these two good questions from the original post, particularly #3?

Do you need to produce actual purchase receipts for the donated bottles, or is it enough to have evidence of what the bottle would have cost at the time it was purchased?

[Mark_Golodetz]

2. Yes shipping is part of cost, as is cost of any storage. I also deduct the cost of professional wine memberships, publications and charitable donations against capital gains.
3. Actual sales receipts are best of course. Anything else according to your accountant’s appetite for risk.

Overall, you are better off selling your wines at market, and donating the proceeds.

[Mark_Golodetz]

Good thing I got so many wines that aren’t worth what I paid for them.

Indeed. I’m going to be donating a “Goopy High Scoring Australian Shiraz from the early 2000s” tasting the next time around.

Joking aside, it would be a good reason not to pick appreciated wines for donations and donated tasting events. Yet another market-distorting behavior encouraged by the tax code, such as elderly people hanging onto appreciated stocks and real estate to their deaths, so they can get a stepped up basis through inheritance.

Wine is a law unto itself; on paper I can donate the full market value to the charity, who would in turn buy the wines from me at that cost. But, because I cannot legally sell wine to that charity, I am stuck.

[crickey]

This is the relevant IRS publication.

p526.pdf

It says you use fair market value for a good like wine that has decreased in value. Wines that may have increased in value have a more complicated rule set I’m not going to summarize. 526 defines “fair market value” as “…the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.”

[Paul_Miller]

If anybody is looking to donate wine, I’m on the Board of a charity, Blessons for Women (www.blessons.org), and we’re always looking for wine in our charity auctions and events, particularly if the wine is from a woman-owned winery or the winemaker is female. Just sayin’.

[John_Kight]

The Related-Use Rule: Income tax deductions for donations of artwork, collectibles, wine collections, watercraft, and similar tangible personal property are limited to your cost basis unless the donated personal property is related to the charity’s tax-exempt purposes.

This is exactly correct. That is why someone needs to create a “charity” whose charitable purpose is to teach the underprivileged to enjoy and appreciate fine wine that is donated by collectors for such purpose.

[JessicaN]

I realize this is an old thread, but is the appraisal still considered necessary for donations over 5000? Everyone I’ve consulted says they just keep a spreadsheet with cost basis, which I used for the dollar amounts, but the instant the total dollar amount for non-cash goods goes over 5000, a 8283 form is generated and there is a section for the appraisers signature. I’m asking those who have donated more than 5000 - Is wine considered a collectible that needs an appraisal? I made six donations over the year in 2024 totaling over that 5000 threshold. Can I just get by with keeping records on a spreadsheet in case of audit like everyone else I know who donated wine or will my filing be considered ‘incomplete’ if the 8283 forms are not signed by an appraiser? On top of that, I think the appraiser needed to sign off prior to the donation, but the language is unclear. There is a significant difference in claiming less than 5000 from the actual cost basis as I donated 46 cases of wine last year (cellar reduction at it’s finest).