Capital Equipment Acquisition: Donations

Equipment Acquired through a Donation to the University of Minnesota

An equipment item donated to the University of Minnesota must have its value determined. A formal appraisal is used to determine the fair market value (FMV) of the donated equipment item. The donated equipment must meet all of the following criteria to be classified as a capital equipment asset:

• have a FMV or an estimated Net Book Value (NBV) of $5,000 or greater
• the University must have title or ownership rights of the equipment
• the equipment must have a useful life of 1 year or greater

If no formal appraisal exists for the donated equipment item, or if the equipment does not meet the criteria above, then the equipment cannot be classified as a capital equipment asset.

Donation - Capital Equipment Asset

1. The department obtains from the donor a formal appraisal of the equipment item and a completed IRS Form 8283: Noncash Charitable Contributions (PDF). The formal appraisal must show the value of the equipment item to be $5,000 or greater to be considered for capital equipment asset classification.
2. The department completes form UM 1561: Capital Equipment Asset Donation Acquisition Form (PDF).
3. The department submits to the Director of Tax Management the formal appraisal of the equipment item, the completed IRS Form 8283, and the completed form UM 1561.
4. The Director of Tax Management receives and reviews from the department the formal appraisal of the equipment item, the completed IRS Form 8283, and the completed form UM 1561. If the donation is approved, then the Director of Tax Management signs IRS Form 8283 on behalf of the University and forwards to Accounting Services:
   1. the formal appraisal of the equipment item
   2. the signed IRS Form 8283, and
   3. the completed form UM 1561.

   If the donation is not approved, then the Director of Tax Management returns to the department the formal appraisal of the equipment item, the completed IRS Form 8283, and the completed form UM 1561 with an explanation of the disapproval.

5. Accounting Services receives and reviews the documents from the Director of Tax Management to ensure the documents contain all required data elements. If the completed form UM 1561 contains all of the required data elements, then Accounting Services signs form UM 1561. If the completed form UM 1561 does not contain all of the required data elements, then Accounting Services does not process the completed form UM 1561 and returns it to the department with an explanation of the denial.
6. Accounting Services retains a copy of the signed IRS Form 8283 and the original signed form UM 1561, and returns to the department the original signed IRS Form 8283 and a copy of the signed form UM 1561.
7. The department receives the capital asset equipment item from the donor.
8. The department notifies Accounting Services of the receipt of the capital asset equipment item. The notification to Accounting Services must be made to [email protected] and must reference the document number that is applied to the signed form UM 1561 by Accounting Services.
9. The department sends the donor the original signed IRS Form 8283 with a letter to acknowledge the receipt of the equipment item and thank the donor for the gift.
10. Accounting Services receives and acknowledges from the department the notification of the receipt of the equipment item.
11. Accounting Services assigns a University ID number to the equipment item and records it in PeopleSoft Asset Management as a capital equipment asset.
12. Accounting Services forwards to the Office of Development a copy of the signed form UM 1561.
13. Accounting Services travels to the department to verify the information on the signed form UM 1561 and to affix a bar-coded University ID number tag to the capital equipment asset.

Donation - Non-capital Equipment

1. The department receives the equipment item from the donor.
2. The department sends the donor a letter to acknowledge the receipt of the equipment item and thank the donor for the gift.
3. The department reports to the Office of Development the donated equipment item.
4. The department manages the non-capital equipment asset according to the policies and procedures of the department's Resource Responsibility Center (RRC).