Charitable Contributions of Cars, Boats and Planes
The following information was taken from the RIA Federal Tax Handbook 2006:
Page 313, Charitable contributions of cars, boats and planes.
Special rules apply for charitable contributions of motor vehicles, boats and airplanes that aren't in taxpayer's inventory or held for sale in the ordinary course of his business ("qualified vehicle donations"), if the donation's claimed value exceeds $500. (Code Sec 170(f)(12)) The donor's charitable deduction can't exceed the gross proceeds from the charity's sale proceeds unless:
- there's a "significant intervening use" of the vehicle by the charity (actual, significant use to substantially further the charity's regularly conducted activities) prior to its sale:
- the charity materially improves the vehicle (significantly increases its value) prior to its sale (minor repairs or routine maintenance aren't enough); or
- the charity sells it at a price significantly below FMV (or gives it away) to a needy individual in direct furtherance of its charitable purpose of relieving the poor and distressed or the underprivileged who need vehicles.
If (1), (2), or (3) apply, the donor may claim a deduction for the vehicle's FMV, using the "blue book" value for a similar vehicle (for post June 3, 2005 contributions and until regulations are issued, private party sale amount may be used).
A deduction for donated vehicles whose claimed value exceeds $500 isn't allowed unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgement from the donee. (Code Section 170(f)(12)(A)) It must:
- contain the donor's name and taxpayer identification number (TIN), the vehicle identification number (or similar number), and if exceptions (1), (2), or (3) in the list above apply, supporting details.
- generally be made within 30 days after the vehicle's sale (within 30 days of the contribution if exceptions (1), (2) or (3) apply): and
- if the charity sells the vehicle and none of the three exceptions apply, state that the vehicle was sold in an arm's length transaction between unrelated parties, show the gross proceeds, and declare that he deductible amount can't exceed the gross proceeds.
A wealth of additional superfluous information about contributions can be obtained by going to www.irs.gov and bring up Publication 526, Rev December 2005, Cat. No. 15050A.
Good luck, and remember everyone is responsible for the filing of their own tax return - don't go blame Al's Mom.