Originally Posted by MDtR-Chicago

You are both correct and incorrect. Stock and other capital assets are handled differently than simple product donations.

For a donation of groceries, you are allowed to take the Fair Market Value UP TO your cost basis - generally what you paid at the store.

So if you donate $500 worth of groceries, but you only paid $50, your allowable donation is generally $50. Regardless of what receipt you get from the charity, it is your responsibility under tax code to substantiate YOUR cost basis in the groceries, by keeping the receipt of your PURCHASE. That is what will generally be allowed in an audit.

(That same receipt will also generally substantiate the Fair Market Value cap, because it will show a retail price for which the product was actually sold around the time of your donation.)

Stock you've held for less than a year generally follows a similar rule. If you paid 10K for stock that appreciated to 100K within a few months, your deduction would generally be capped at 10K.

There are special rules for capital assets, such as stock, held more than a year. In those cases you may be able to claim the appreciated (100K) value.

But the net of it is - for super couponing, if you donate to a food pantry, you're only allowed your actual cash cost.

Details are in IRS Publication 526.