Wonderful experience with the entire team. We received a full appraisal that was very thorough and included everything we needed as a nonprofit from an appraisal company to accept a donated vehicle and provide the appropriate documentation.
Inventory Appraisal
Business inventory appraisal services for IRS Form 8283 filings and non-cash charitable deductions, prepared in accordance with USPAP. Legacy Donation Appraisers values retail merchandise, excess stock, raw materials, and finished goods donated nationwide.
- USPAP-compliant inventory appraisals
- Fair market value documented for Form 8283
- Supports the Section 170(e)(3) enhanced deduction
BUSINESS INVENTORY
Why Excess Inventory Makes a Smart Donation
Excess, discontinued, or slow-moving inventory sitting in a warehouse often costs a business money in storage and carrying costs long before it ever sells at full price. Donating that stock to a qualifying charity instead of liquidating it at a steep discount can convert a shrinking asset into a deduction based on its fair market value.
The IRS treats inventory donations differently depending on entity type. A C-corporation donating inventory for a use consistent with a charity's mission may qualify for enhanced deduction rules under Section 170(e)(3), while other entities claim the standard fair-market-value deduction. Either way, the deduction rests on the fair market value you report, and an independent appraisal documents how that figure was reached.
This comes up most often with retailers clearing seasonal stock, manufacturers retiring a discontinued product line, or distributors offloading overstock after a contract ends.
IRS RULES
What the IRS Looks at for Inventory Donations
Ordinary Income Property
Inventory is ordinary income property, so the deduction is generally limited to fair market value minus the amount that would be ordinary income if sold, in practice cost basis.
The Enhanced C-Corporation Deduction
Under Section 170(e)(3), C corporations giving to charities for the care of the ill, the needy or infants can deduct basis plus half the appreciation, up to twice basis, when the charity provides a written statement on use and disposition.
Fair Market Value Still Has to Hold Up
The enhanced calculation runs on fair market value, and the IRS can challenge the figure, which is where an independent USPAP appraisal earns its keep.
When C Corporations File
C corporations, other than personal service and closely held corporations, file Form 8283 only when the deduction is more than $5,000 per item or group of similar items. Personal service and closely held corporations file above $500.
The Charity's Written Statement
The enhanced C-corporation deduction depends on a written statement from the charity that its use and disposition of the goods will be for the care of the ill, the needy, or infants.
Partnerships and S Corporations
A partnership or S corporation claiming noncash gifts of more than $500 files Form 8283 with its Form 1065 or 1120-S and gives each member receiving an allocation a completed copy.
INVENTORY CATEGORIES
What Counts as Donated Inventory
Retail and Wholesale Merchandise
Retail inventory covers whatever didn't sell through the usual channel, from closeout racks to wholesale lots a distributor can no longer move.
Common asset types include:
- Retail merchandise inventory
- Wholesale inventory
- Excess and overstock inventory
- Closeout merchandise
Raw Materials and Finished Goods
Production inventory sitting between the warehouse and the shelf still carries real market value, even once a product line is discontinued.
Common asset types include:
- Raw materials and supplies
- Finished goods inventory
- Obsolete inventory
- Returned goods inventory
Food, Beverage and Pharmaceutical Inventory
Perishable and regulated inventory needs extra attention to shelf life and compliance, but it can still support a donation deduction before it expires.
Common asset types include:
- Food and beverage inventory
- Pharmaceutical and medical supply inventory
- Fabric and textile inventory
Electronics, Auto Parts and Specialty Goods
Specialty and technical inventory categories each carry their own market data, from consumer electronics to automotive components.
Common asset types include:
- Electronics and technology inventory
- Automotive parts inventory
- Jewelry and gemstone inventory
- Art and collectibles inventory
- Lumber and building materials inventory
DONATION ROUTES
How Inventory Donations Are Structured
Direct Gift to a Nonprofit
Merchandise transfers directly to the charity or a distribution partner, with the appraisal documenting fair market value at the time of transfer.
Enhanced C-Corporation Deductions
Inventory donated for a use related to the charity's mission, such as feeding or clothing those in need, may qualify for a deduction above cost basis under Section 170(e)(3).
Product Donation Programs
Some donors route inventory through established donation and redistribution programs, which still need the same fair market value documentation and Form 8283 reporting.
HOW IT WORKS
How We Appraise Donated Inventory
- 01
Inventory Details & Documentation
Share item lists, quantities, cost records, and any purchase invoices for the inventory being donated.
- 02
Market & Cost Research
We research comparable sales of similar inventory, current wholesale and liquidation pricing, and replacement cost data.
- 03
Condition & Marketability Review
We assess obsolescence, shelf life, damage, and current demand, since these materially affect what donated inventory is actually worth.
- 04
USPAP-Compliant Report
We prepare a written appraisal report stating fair market value and the methodology used to reach it.
- 05
Report Ready for Your Return
You receive a USPAP-compliant report documenting fair market value, ready to support your Form 8283 filing and your records.
Donating Inventory Before Year-End?
The deduction follows the date the goods transfer to the charity. Line up the valuation before the shipment leaves the dock.
PRICING
What Determines the Cost of an Inventory Appraisal
Number of SKUs
More distinct items mean more individual valuations to research and document.
Product Categories
A single category prices faster than a mix of retail, food, and electronics inventory in one assignment.
Completeness of Cost Records
Purchase invoices and cost records speed the work; gaps mean more research to fill in.
On-Site Count Needed
Most inventory appraisals work from your records and photos; a physical count adds scope when condition is in question.
Enhanced Deduction Documentation
C-corporation claims under Section 170(e)(3) call for the charity's written use-and-disposition statement alongside the appraisal.
Your Deadline
We confirm timing up front, including whether expedited service is available for your filing date.
CLIENT VOICES
What Donors and Advisors Say About Our Appraisals
We had a very unusual appraisal request for merchandise valued at over half a million dollars, and the team handled it quickly and thoroughly. We will definitely return for any future appraisal needs and highly recommend them to anyone in need of appraisal services. – TGBA, Inc., Tampa, FL
Very thorough and professional — great communication and outstanding service. Highly impressed with their work!
CREDENTIALED APPRAISERS
Credentialed by ISA, ASA, CAGA & AAA
Every inventory appraisal is prepared in accordance with USPAP by appraisers holding credentials with recognized organizations.
International Society of Appraisers (ISA)
American Society of Appraisers (ASA)
Certified Appraisers Guild of America (CAGA)
Appraisers Association of America (AAA)
RELATED SERVICES
More Donation Appraisal Services
Business Valuation for Charitable Donation
USPAP-compliant valuations of closely held business interests donated to charity.
Machinery & Equipment Appraisal for Charitable Donation
USPAP-compliant appraisals of donated manufacturing, construction, and agricultural equipment.
Personal Property Appraisal for Charitable Donation
USPAP-compliant appraisals of donated art, jewelry, antiques, and household collections.
INVENTORY DONATION QUESTIONS
Inventory Donation, Explained
Why get an independent appraisal for donated inventory?
Your deduction depends on the fair market value you claim, and for C corporations using the enhanced deduction, that value drives the calculation. An independent USPAP appraisal documents how the value was reached if the IRS ever asks.
Do C-corporations get a bigger deduction for inventory donations?
C-corporations donating inventory to certain charities, for a use consistent with the charity's mission such as feeding or clothing those in need, may qualify for an enhanced deduction above cost basis under Section 170(e)(3). An independent appraisal documents the fair market value that calculation depends on.
How is fair market value determined for obsolete or discontinued inventory?
We weigh what the specific goods would actually sell for in their current market, factoring in obsolescence, shelf life, packaging condition, and demand, rather than the original wholesale or retail price.
Do I need to donate my entire inventory, or can I donate a portion?
You can donate any portion of your inventory. A partial donation still requires the same documentation: item lists, quantities, and cost records for exactly what is being transferred to the charity.
How much does an inventory donation appraisal cost?
Fees are quoted as a fixed fee before any work begins, never hourly. Scope depends on the number of SKUs, categories involved, and how complete your inventory records are.
How long does an inventory donation appraisal take?
Timing depends on the size of your inventory list and how complete your records are. Tell us your deadline, including any filing date, and we'll confirm up front whether we can meet it before work starts.
How is the enhanced deduction calculated?
For qualifying C-corporation gifts where the charity provides a written statement on use and disposition, the enhanced deduction under Section 170(e)(3) is cost basis plus half the appreciation, capped at twice basis.
GET STARTED
Request Your Inventory Appraisal
Scoped to your inventory, quoted as a fixed fee.