Car to be donated

[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.

[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]

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.