Steps to Get the Tax Deduction:

1. Determine the Fair Market Value

◦ Research what similar used equipment sells for (eBay, Reverb, Craigslist).

◦ If the total value is over $5,000, an independent appraisal is required.

2. Get a Donation Receipt from MSS

◦ MSS will provide a written acknowledgment stating:

▪ A description of the donated items.

▪ A statement that no goods or services were received in exchange for the

Donation.

3. Fill Out the Necessary Tax Forms

◦ If the total value is under $500, you just report it on Schedule A (Itemized

Deductions) of your tax return.

◦ If the donation is between $500 and $5,000, fill out IRS Form 8283 (Noncash

Charitable Contributions).

◦ If the value is over $5,000, you need an independent appraisal (see below) and a

signed Form 8283 from MSS.

4. Claim the Deduction on Your Taxes

◦ File your tax return with Schedule A and Form 8283 (if applicable).

5. Keep Records for Your Files

◦ Save the donation receipt, photos of the items, and any valuation research in case

of an audit.

Things for Donors to Consider:

Be aware that there are certain circumstances where a donor may not be able to deduct the full

fair market value (FMV) even when donating an item to a 501(c)(3) nonprofit organization. Here

are the key reasons why this could be the case:

1. The Item Has Depreciated Beyond FMV

• If the item has significantly depreciated in value (e.g., old or outdated audio equipment),

the IRS may require the donor to deduct only the lesser of FMV or the item’s adjusted

cost basis (what they originally paid for it).

2. The Item Does Not Align With the Nonprofit’s Mission; Related Use Rule

• If the donation is not used for the nonprofit’s core mission, the donor can only deduct the

original purchase price or adjusted basis, not the FMV.

◦ Example: If MSS receives a donation of a grand piano but sells it instead of using

it for artist recording sessions, the donor can only deduct what they originally paid

for it, not its FMV.

◦ This is the most confusing aspect of this entire document but, thankfully, it

doesn’t apply as MSS only seeks donations of mission-related items (music gear)

3. The Donor Receives Something in Return; Quid Pro Quo Rule

• If the donor receives goods or services in exchange for the donation (e.g., free

advertising, event tickets, or merchandise), they must subtract the value of what they

received from the deduction.

4. The Item Requires an Appraisal (Over $5,000 Rule)

• For donations valued at over $5,000, the IRS requires an independent qualified appraisal

to justify the FMV deduction. Without this, the deduction may be limited or disallowed.

• MSS will pay any appraisal fees

5. The Donor Has Already Depreciated the Item for Business Use

• If the donor previously claimed depreciation on the item (e.g., as a business expense for

studio equipment), the IRS may limit the deduction to the adjusted cost basis rather than

FMV.

6. The Donation is to a Non-Qualified Organization (N/A)

• Only donations to registered 501(c)(3) nonprofits qualify for deductions.

• MSS is a registered 501(c)(3) nonprofit organization.

Key Takeaways for Donors:

✅ If the donated item aligns with the nonprofit’s mission and is actively used, the donor can

deduct the FMV (what it would realistically sell for online). In the case of MSS’s mission, you

would receive full FMV for anything related to playing, recording, releasing or performing music

✅ For items over $5,000, the donor must obtain a qualified appraisal to claim the FMV

deduction (MSS will pay these costs).

If Your Donation Requires Appraisal: Only Applicable for Deductions of $5,000 or Above

List of MN Audio Equipment Appraisers:

Audio Perfection

Minneapolis, MN

While primarily a retailer, they offer a selection of used audio equipment and may provide

appraisal services or referrals to qualified appraisers.

Equipment Appraisal Services (EAS)

Minneapolis, MN

Offers accredited and certified appraisals for various machinery and equipment types, including

audio recording equipment. Their reports comply with USPAP and are suitable for various

purposes.

LaVonne Music

Savage, MN

Offers formal written instrument appraisals for insurance and other purposes.

Vintage Strings & Musical Instrument Co

Minneapolis, MN

Provides written appraisals for guitars and other stringed instruments.

House of Note

Minneapolis, MN

Offers appraisal services for violins, violas, cellos, and bows.

Average Appraisal Fees:

• Per Item: Fees can range from $50 to $150 per item, depending on the appraiser and the

instrument's complexity 

• Bulk Appraisals: Some appraisers may offer discounted rates for evaluating multiple

items simultaneously. It's advisable to discuss this upfront.

• MSS will pay these costs

The Appraisal Process:

Obtaining appraisals for a diverse collection of musical instruments and equipment involves the

following steps. MSS is willing to pay for appraisals and provide transport to appraisers, if

necessary.

1. Identify Qualified Appraisers:

• Specialized Appraisers: Seek professionals experienced in evaluating specific types of

instruments or equipment. For example, stringed instruments like violins or guitars may

require different expertise than audio recording equipment.

• Reputable Establishments: Contact local music shops, luthiers, or specialized appraisal

services.

2. Understand Appraisal Costs:

• Fee Structures: Appraisal fees can vary based on the instrument type, complexity, and

the appraiser's expertise.

◦ As an example, Claire Givens Violins charges:

▪ $130 for an instrument

▪ $60 for a bow accompanying an instrument

▪ $90 for a bow alone

▪ $170 per hour for additional research

• Verbal vs. Written Appraisals: Verbal appraisals may be less expensive but don't

provide official documentation. Written appraisals are formal and suitable for insurance

or resale purposes.

3. Prepare for the Appraisal:

• Gather Documentation: Collect any purchase receipts, previous appraisals, repair

records, and provenance details.

• Instrument Condition: Ensure each item is clean and in good condition to facilitate a

thorough evaluation.

4. Schedule Appointments:

• Contact Appraisers: Reach out to chosen professionals to discuss your collection and

inquire about their availability and specific requirements.

• Logistics: For large collections, consider whether the appraiser can visit your location or

if transportation of the items is necessary.

5. Obtain and Review Appraisal Reports:

• Detailed Descriptions: Reports should include information about the instrument's make,

model, age, condition, and materials used.• Valuation: The appraised value, often reflecting fair market or replacement value, will be

Provided.

• Photographs: High-quality images documenting the instrument's current state are

typically included.

6. Utilize the Appraisals:

• Insurance: Use the appraisal for obtaining or updating insurance coverage.

• Sale or Donation: An appraisal can assist in setting a fair selling price or determining tax

deductions for donations.

By following these steps and consulting with qualified professionals, you can obtain accurate

valuations for your collection, ensuring informed decisions regarding insurance, sales, or

donations.