Car to be donated

[DMICPA]

Charity for mixed use asset

DAVC:

Yeah, I believe you are 100% correct. When I take the business use % on the car, it is fully depreciated and therefore the deduction is zero for the business portion. Now, on the personal portion, the deduction would be the lesser of the cost or the FMV.

On the 1040, it will be a matter of reporting the contribution as stated on the form, and attaching a schedule dividing up the charity part and only deducting the personal portion.

Thanks for your insight.

[Davc]

Client donated his 70% business use auto to a charity and got a receipt for $2,500

Book value of car is $5,000.

I would think that the "loss" on this car would not be computed as it was donated, not sold.

The tax program treats it like a sale of an asset and has a 4797 loss of $2,500.

So the T/P gets a business loss of $2,500 and a charity deduction of $2.500.

Is this correct. It is getting near the end of the deadline and I am a little confused on this.

You aren't providing enough info. In essence you have two transactions, one a donation of a business vehicle, the other a personal vehicle.

Example:

Original cost 16,667

Assume 70% business over the life of the auto. Also assume it's fully depreciated.

You have a contribution of a business auto unadjusted basis 11,667 less 11,667 depreciation. Contribution would be limited to remaining basis of 0.

You also have a contribution of a personal auto that cost 5,000 with a FMV of 750 assuming the charities number is correct.

[DMICPA]

Business Vehicle donated

Client donated his 70% business use auto to a charity and got a receipt for $2,500

Book value of car is $5,000.

I would think that the "loss" on this car would not be computed as it was donated, not sold.

The tax program treats it like a sale of an asset and has a 4797 loss of $2,500.

So the T/P gets a business loss of $2,500 and a charity deduction of $2.500.

Is this correct. It is getting near the end of the deadline and I am a little confused on this.

[BOB W]

Over a million for that year......and many other years as well. One of his low year's was only $750,000 ish. Deferred Comp you know. Life was tuff that year for him. The good thing is that he saved a lot of his earnings and is now retired.

[MAJ]

It was beautiful.... fully reconditioned ...mint. It was surveyed at $600,000. Have all the pictures and whatever. Client paniced when letter came but I was confident. Boy was I the Hero when I called the client with a "No Change".

Well dude - You're way out of my league!! The income on that return must have been substantial to take a gift deduction like that.. I mean - Hell - they should have sold the boat for half that - Donated a $100k and gone on a nice vacation.. but then again. The moment they considered donating it tells me they aren't worred about the Cash!!

Enjoy!

[BOB W]

It was beautiful.... fully reconditioned ...mint. It was surveyed at $600,000. Have all the pictures and whatever. Client paniced when letter came but I was confident. Boy was I the Hero when I called the client with a "No Change".

[MAJ]

53' Yacht Donated --- Niiice....

I was audited on a simular situation and I was very happy that I possessed the letter. It stopped the audit right in its tracks. The exempt org sold the boat and the IRS was looking for a reduced valuation (for the sale price) instead of the survey price. The organization abused the boat and blew one engine. A $40,000 repair. They sold it dirt cheap.

It was a 53' yacht done on a bargain sale.

Nice.. 53' yacht! Wish they donated it to me.. I'd take the dogs out for a cruise every weekend!! Of course they'd have to supply the gas!!

Bob W - I like your signature / disclaimer... Smart.

I would get the letter first - totally agree. Pictures of the donated property at the time of donation are always a good bet too. Of course photograph the better side of the boat -- like the one without the huge hole!!

[BOB W]

Yes, probably a good idea. Although they are required to forward Copy A to the IRS like any other 1099.

I was audited on a simular situation and I was very happy that I possessed the letter. It stopped the audit right in its tracks. The exempt org sold the boat and the IRS was looking for a reduced valuation (for the sale price) instead of the survey price. The organization abused the boat and blew one engine. A $40,000 repair. They sold it dirt cheap.

It was a 53' yacht done on a bargain sale.

[Burke]

I'm sorry, but you are relying on the exempt organization doing everything right. I would get the letter before transferring title of the auto to the organization..

Yes, probably a good idea. Although they are required to forward Copy A to the IRS like any other 1099.

[BOB W]

Box 5a applies and 5c should be completed. That is sufficient.

I'm sorry, but you are relying on the exempt organization doing everything right. I would get the letter before transferring title of the auto to the organization..

[Burke]

Box 5a applies and 5c should be completed. That is sufficient.

[BOB W]

The check boxes seem to be unclear and/but I would still require a letter stating it would be used in the exempt function. Intention at the time of donation controls the full market value deduction for the grantor even if later the organization sells the car for a lower price.

[Lion]

1098-c

The Form 1098-C has boxes to check re using the car in the charity's work. You can download an informational copy of the form as well as the instructions at IRS.gov Forms & Publications.

[BOB W]

You will also need a letter from the organization stating that the vehicle will be used in the operation of the organization and it is not intended for resale.

[JON]

Thanks

guys I was hoping there was an exception for the appraisal.