Car to be donated

[JON]

to a small not for profit charity.. The Kelly Blue Book value (2002) is somewhere between $7,500 and $10,500. It is going to be used by the charity - rescue animals - what does the charity have to make out and give to my client. They seem confused as they have not done this before (non cash).

[Burke]

See TB page 4-20 for requirements including VIN of vehicle. Also see Form 1098-C which covers the deduction of cars. Copy of one or other has to be attached to tax return. FMV of car for deduction will be "private party sale" value on KBB at time of gift, since it will not be sold. Good idea to print this out in timely fashion, as values change monthly and you can't get it for a prior date if you wait until tax return is due.

[David1980]

Keep in mind that if the donation is more than $5,000 you need an appraisal.

[JON]

Thanks

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

[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.

[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]

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.

[Burke]

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

[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]

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]

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.

[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]

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]

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]

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.