Vehicle Donation to Minister

[peggysioux]

Individual wants to donate vehicle to local church to be used by minister of church. I am aware of:

"Designated contributions are those made to a church with the stipulation that they be used for a specified purpose. If the purpose is an approved project or program of the church, the designation will not affect the deductibility of the contribution. However, if a donor stipulates that a contribution be spent on a designated individual, no deduction ordinarily is allowed unless the church exercises full administrative control over the donated funds to ensure that they are being spent in furtherance of the church’s exempt purposes. It should be treated as compensation to the individual receiving it. Generally, deductibility is hinged upon the right of the church to control the funds."

Would vehicle need to be registered and insured under church rather than minister to meet the "full administrative control" of church to qualify for deductibility by donor? Another concern is that the donor is a relative of the minister.

My first response is the vehicle donation would be deemed a gift to minister rather than a donation to church. However, in my research, I found that if vehicle is to be used in furtherance of church's exempt purpose, the donation would be allowed so I began to doubt my first response. I would appreciate input from other tax preparers on how they would handle.

Peggy Sioux

[FEDUKE404]

Vehicle donation to minister

Vehicle donations OF ANY TYPE now create extra hurdles to jump over, specifically for justification of the allowable donation value and other "extras" for vehicles as stated in Part I of Form 8283. A Form 1098-C may or may not become an issue. Several years ago the IRS pretty well slammed the door on inflated donation values for vehicles, no matter how nice you might think that low-mileage 1998 Buick is.

Aside from that aspect, I don't see any way you can donate a vehicle directly to a minister and come up with suitable information for Form 8283.

The donation would have to be to the organization, with the title showing ownership by the organization (not by the minister). Whether strings can be attached or the gift designated using something like "Minister's Transportation Vehicle" is a separate issue.

Good luck!

FE

[Uncle Sam]

Vehicle Donation to Minister

Feduke answered it- the donation needs to be made to the church, not the minister. And the church needs to title and insure the vehicle in its name, otherwise the minister has taxable compensation.
It's the second issue that concerns me more - related party transaction.
If the guy wants to gift the vehicle to his relative - so long as the FMV is under the $14,000 threshhold, you've got no issue.
But to get the tax donation for vehicle to church - the vehicle must be in church's name and insured on its policy.

[peggysioux]

Thank you both for your input....very much appreciated!!

Peggy Sioux

[taxea]

Feduke answered it- the donation needs to be made to the church, not the minister. And the church needs to title and insure the vehicle in its name, otherwise the minister has taxable compensation.
It's the second issue that concerns me more - related party transaction.
If the guy wants to gift the vehicle to his relative - so long as the FMV is under the $14,000 threshhold, you've got no issue.
But to get the tax donation for vehicle to church - the vehicle must be in church's name and insured on its policy.

I would add not for exclusive use of the minister and not used for personal purposes of minister or other church officials.