Donation of Vehicle

[ruthc]

Client donated a 1999 Audi A6 (with vehicle ID, etc) in 2017 to Kars 4 Kids. He received a letter from them stating it makes a difference in the lives of the children they assist. Apparently they did not sell it to anyone and did not state they would sell it. They also state that he can deduct the value of the vehicle up to $500. No goods or services were provided in return. No 1098C was received. So can he deduct $500, or should he have gotten the FMV at the time he donated it? Does he have to attach the letter to the efiled return? After reading the pub on vehicle donations, I think I can just put $500 as a donation, and not have to attach anything because it is not over $500. I want to feel comforatable I am doing it correctly. Thanks for any responses.

[taxea]

It has been my experience with donating vehicles to non-profits that they are not in the business of selling cars so the wholesale them for a maximum of $500. This limits what the TP can deduct. The only time a TP can deduct the full FMV of the donation is if the NP uses the vehicle rather than giving it away.
For this reason I recommend to everyone considering donating a vehicle to sell it and donate the proceeds to the NP. This seems to be the only way to get a deduction closer to the FMV. Its a win-win on both sides.

This is something, I believe, should be made more public than it appears at this time.

[TAXNJ]

What is....

.....The only time a TP can deduct the full FMV of the donation is if the NP uses the vehicle rather than giving it away.....

your statement above based on? if you donate it to an IRS recognized charity? Still cannot find what you state, so will you share your verified research cite?

Original poster should reference IRS pub 561.

[Gene V]

Deducting FMV

I think taxea was referring to Pub. 526 page 8 Exception 1

https://www.irs.gov/pub/irs-pdf/p526.pdf

[ruthc]

Thank you!

Thanks to all for your responses. I think I should be ok for now.

[Burke]

It has been my experience with donating vehicles to non-profits that they are not in the business of selling cars so the wholesale them for a maximum of $500. This limits what the TP can deduct. The only time a TP can deduct the full FMV of the donation is if the NP uses the vehicle rather than giving it away.
.

I agree with this assessment. One non-profit that often keeps the cars is our local Refugee and Immigration Services organization, since these people need the transportation to get to and from work. That's who I recommend to my clients. Then they can take FMV.

[TAXNJ]

Yes, but

I think taxea was referring to Pub. 526 page 8 Exception 1
https://www.irs.gov/pub/irs-pdf/p526.pdf

taxea was saying only if the NP uses it.

However, as your reference of Pub 526 above, states in part ".....if the charity sells the car at a discount to a needy individual or keeps the car for its own internal use, then claim a deduction for its fair market value...". So it could be either the NP or needy individual. Of course, there are various examples of restrictions to what applies to each situation.

Again, your reference of Pub 526 above would provide the guidance to the Original Poster's scenario.

Then again, taxea's suggestion for a Donor to sell the vehicle on their own and then donate the proceeds to charity is something to consider.

Thanks Gene V

[taxea]

Thank you, Gene, for backing me up. I post based on my experience and knowledge of tax law. I don't do others research for them so I don't respond with "cites"

[liberty]

Thank you all for your suggestion.

Thank you all for your suggestion. I'll present the options to the client.

[taxea]

Client donated a 1999 Audi A6 (with vehicle ID, etc) in 2017 to Kars 4 Kids. He received a letter from them stating it makes a difference in the lives of the children they assist. Apparently they did not sell it to anyone and did not state they would sell it. They also state that he can deduct the value of the vehicle up to $500. No goods or services were provided in return. No 1098C was received. So can he deduct $500, or should he have gotten the FMV at the time he donated it? Does he have to attach the letter to the efiled return? After reading the pub on vehicle donations, I think I can just put $500 as a donation, and not have to attach anything because it is not over $500. I want to feel comforatable I am doing it correctly. Thanks for any responses.

I advise my clients this way:
Never, never, never donate a vehicle if the value is more than 500. Charities are not in the business of selling cars. Instead, they wholesale them, usually for 500. If the TP did not receive a 1098C or letter of value they should ask what happened to the vehicle. If it was not wholesaled and is being used by the charity...get it in writing...only with that document can TP take a larger donation value.

It is always better to sell the vehicle outright and give the cash to a charity.

[taxea]

your statement above based on? if you donate it to an IRS recognized charity? Still cannot find what you state, so will you share your verified research cite?

Original poster should reference IRS pub 561.

My posts are based on my experience, research and training. I let the poster do their own research, not do it for them.

[TAXNJ]

My posts are based on my experience, research and training. I let the poster do their own research, not do it for them.

You are replying to a different February 2018 post which you already made that statement.

Here is the recent May 2018 post that needs addressing which is similar:

http://forum.thetaxbook.com/showthread.php?28653-New-car-donation