This Tax Tip Spotify Podcast and/or WordPress Blog Post understands you are considering Donating to a Qualified Charitable Organization your:
- Car to Charity,
- Boat to Charity,
, and/or your - Airplane to Charity.
Such an asset is considered a qualified vehicle and special rules apply to such donations. Generally, if you donate a qualified vehicle to a Qualified Charitable Organization and you claim a deduction of more than $500, you can deduct the smaller of the gross proceeds from the sale of the vehicle by the organization, or the vehicle’s fair market value on the date of the contribution. If the vehicle’s fair market value was more than your cost or other basis, you may have to reduce the fair market value to figure the deductible amount.
Generally, you must attach to your tax return Copy B of the Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, (or other statement containing the same information as Form 1098-C) you received from the organization. The Form 1098-C (or other statement) will show the gross proceeds from the sale of the vehicle.
If you do not attach Form 1098-C (or other statement), you cannot deduct your contribution. Generally, you must get Form 1098-C (or other statement) within 30 days of the sale of the vehicle.
There are two exceptions to the rules for deducting a qualified vehicle donation of more than $500:
- First, if the qualified organization makes a significant intervening use of or material improvement to the vehicle before transferring it, and you claim a deduction of more than $500, you generally can deduct the vehicle’s fair market value at the time of the contribution. But if the vehicle’s fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount. The Form 1098-C (or other statement) will show whether this exception applies.
- Second, if the qualified organization will give the vehicle, or sell it for a price well below fair market value, to a needy individual to further the organization’s charitable purpose, and you claim a deduction of more than $500, you generally can deduct the vehicle’s fair market value at the time of the contribution. But if the vehicle’s fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount. This exception does not apply if the organization sells the vehicle at auction. In that case, you cannot deduct the vehicle’s fair market value.
If the Qualified Charitable Organization sells the vehicle for $500 or less and the exceptions above do not apply, you can deduct the smaller of $500 or the vehicle’s fair market value on the date of the contribution. Again, if the vehicle’s fair market value was more than your cost or other basis, you may have to reduce the fair market value to get the deductible amount.
If the vehicle’s fair market value is at least $250 but not more than $500, you must have a written statement from the qualified organization acknowledging your donation. The statement must contain certain required information.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
Cell: (760)567-3110
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Email: DonFitchCPA@paylesstax.com
Website: https://www.paylesstax.com
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 05012021-1 320-600)