Penalties

You may be liable for a penalty if you overstate the value or adjusted basis of donated property.

20% penalty. The penalty is 20% of the underpayment of tax related to the overstatement if:

1. The value or adjusted basis claimed on the return is 200% or more of the correct amount, and
2. You underpaid your tax by more than $5,000 because of the overstatement.

40% penalty. The penalty is 40%, rather than 20%, if:

1. The value or adjusted basis claimed on the return is 400% or more of the correct amount, and
2. You underpaid your tax by more than $5,000 because of the overstatement.

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