Charitable Valuation: A New Advisory Opportunity for CPAs

Charitable contribution planning is becoming more important for many high-income taxpayers, especially as itemized deductions come back into focus. For CPA firms, this creates a practical advisory opportunity. The challenge is not just identifying charitable gifts but helping clients document and value them in a way that supports the deduction.

To explore this opportunity, Ace Cloud Hosting spoke with Todd Gray, CPA, a 24-year tax professional based in Carlsbad, California, and founder of Value Insights.AI.

Todd created the platform after seeing clients struggle to provide complete documentation and supportable valuations for non-cash gifts. The web-based AI tool helps taxpayers identify, value, and document donated items using photos and comparable sales data. As AI becomes more embedded in everyday tax workflows, many CPA firms are exploring practical use cases that go well beyond automation.

In this conversation, Todd explains why charitable valuation is becoming a bigger advisory opportunity, where documentation gaps commonly appear, and how digital workflows can help CPA firms manage non-cash contribution reporting more efficiently.

1. Why is charitable valuation becoming a bigger advisory opportunity for CPA firms today?

I think we first have to take a step back and acknowledge the fact that Schedule A and associated itemized deduction planning have become relevant again. Recent increases to the State and Local Income Tax (“SALT”) deduction limitations have made itemized deductions relevant and impactful again for many high-income taxpayers, particularly in high-tax states like New York, Hawaii, California, and New Jersey.

As a California CPA, the change in the SALT limitations that accompanied the One Big Beautiful Bill “OBBB” regulations means our itemized deductions have now become more valuable. As we look at Schedule A, medical expenses are still limited to 7.5% of AGI, which is just a high floor to have any deductibility.

Mortgage interest is still capped at the $750k limit for most mortgages unless they were grandfathered in from pre-2019 acquisition debt. With miscellaneous itemized deductions eliminated by the TCJA, that leaves the SALT tax deduction (now up to $40k based on AGI) and charitable contributions as two of the few remaining areas where meaningful itemized deduction planning is still available for CPAs and tax preparers.

With charitable contributions on Schedule A being one of the only places that allow for larger deductions, the value of each contribution is absolutely critical. There are two main types of charitable contributions: cash and non-cash contributions.

Cash contributions are straightforward, as the value is derived directly from the monetary donation made to a qualifying organization—a direct 1:1 monetary value to deduction.

Non-cash contributions may include appreciated stock, real estate, vehicles (cars, boats, planes, etc.), clothing, furniture, and other household items. Each category has unique valuation rules and documentation requirements that can significantly affect the deduction claimed on the tax return.

This creates a significant advisory opportunity for CPAs and tax preparers to help their clients maximize deductions while maintaining proper compliance and substantiation.

2. What types of non-cash charitable contributions create the most confusion or risk for clients?

Clothing and household items. Until recently, there was no effective or efficient way to track and value taxpayer non-cash contributions. With my clients, I would have them come into meetings with stacks of contribution slips containing basic information—taxpayer name, date of contribution, and a couple of generic boxes checked—but they always lacked the description of items donated, estimated valuation of each item, and condition verification that is required under the Internal Revenue Code (IRC).

This would create confusion and require additional dialogue with the client as we would have to go back and forth to obtain the relevant information. Plus, if you are taking those steps after the items have already been donated, you are relying on memory and judgment versus reliable and documentable substantiation.

But this was also the starting point for why we designed and developed the Value Insights.AI app: to provide CPAs with a tool to help their clients document and provide more complete substantiation and a more defensible, higher value for each item.

3. Where do CPAs commonly see documentation gaps in charitable contribution claims?

There is absolutely a gap between what is required under the IRC and what tax preparers typically receive. Taxpayers are unaware that Form 8283 documentation requirements extend far beyond simply retaining the donation slip from the charity. To properly prepare Form 8283 (which is required for any non-cash contribution over $500), the following must be documented:

• Charity name
• Charity address
• Description of item(s) donated
• Date of contribution
• Estimated fair market value (FMV) of the contribution
• Original purchase date and cost basis
• Condition verification (item must be in “good” condition or better, unless a qualified appraisal is obtained)

Most taxpayers do not keep or provide the necessary documentation, which leads to underestimated values or no deduction at all due to lack of proper substantiation.

How can CPAs guide clients on charitable valuation without crossing the line into appraisal work?

Documentation. The client must have complete documentation and substantiation for each item that they donate. Plus, the valuation of each item must be documented.

The default IRS valuation method is Thrift Shop Value. This is a very conservative range for each asset class (men’s shirts, men’s pants, women’s blouses, suits, etc.). This IRS-suggested valuation method is narrow and understated, thereby allowing it to be an adequate fair market value method uniformly applied across different locations. The goal is a simple and straightforward methodology that anyone can apply.

The problem is that thrift shop valuation ranges are intentionally conservative and may not reflect current secondary market pricing for higher-value items, which other valuation methods better capture.

We developed the Value Insights.AI app to solve these fundamental pinch points faced by CPAs, tax preparers, and their clients. Our app relies on a photo and taxpayer-provided information to prepare a valuation report based on comparable sales within the market.

The app performs an AI-driven analysis of the photo to find identical or comparable items within the marketplace (social media, resale websites, etc.), and verifies item condition to calculate a true value of the item.

The app then prepares and delivers a written valuation report for the taxpayer and their tax preparer to use when preparing tax returns. The result is more complete documentation, more defensible valuations, and a more efficient preparation process for both the taxpayer and the tax professional.

This technology helps the taxpayer organize and understand the direct correlation between each contribution and the associated tax benefit. It also places accountability for item verification on the taxpayer, not the CPA or tax preparer. For valuations, this eliminates any potential independence or appraisal concerns since all valuations are sourced from third-party sources.

4. How can better digital workflows help CPA firms manage charitable valuation documentation more efficiently?

With the documentation of each contribution already in written form via the Value Insights app, the CPA or tax preparer can either manually input the Form 8283 information or we are working to code the output into a form where the tax information can be imported directly into tax software.

The effectiveness and efficiency of this non-cash contribution tool have been tremendous for my firm, establishing a structured digital workflow that improves consistency, documentation quality, and reduces excess prep time.

My clients now have a streamlined process: simply photograph each item. By helping our clients document more efficiently, we receive cleaner, more accurate source documentation for tax preparation.

For taxpayers, there is an efficient method for recordkeeping and income tax savings. For CPAs, there is a more valuable, accurate, and efficient tax return to prepare. That’s a win at each level!

When Charitable Giving Becomes a Documentation Strategy

Todd’s perspective makes one thing clear: the value of a charitable deduction depends not only on what the client donated, but on how well that donation is documented.

Without item descriptions, condition details, valuation of support, and source records, firms are left trying to reconstruct facts after the gift has already been made. That creates risk for both the taxpayer and the preparer. It can lead to missed deductions, conservative values, extra back-and-forth, and weaker support if questions arise later.

Stronger workflows change that. When clients capture details at the time of donation, CPA firms receive cleaner source information and can prepare returns with more confidence.

Technology can help close this gap, but the real shift is procedural. Firms that guide clients before donation season, set clear documentation expectations, and use digital tools to collect better evidence can turn a common tax-season headache into a higher-value advisory service.

At Ace Cloud Hosting, we see firms of all sizes embracing cloud technology and AI to free up time, elevate client conversations, and make smarter decisions. As workflows automate and real-time collaboration becomes the norm, accountants must evolve into technology-driven advisors.