Charitable Contributions of
Cars, Boats, and Aircraft
If you donate a car to a qualified organization after December 31, 2004, your
deduction is limited to the gross proceeds from its sale by the organization.
This rule applies if the claimed value of the donated vehicle is more than $500.
However, if the organization makes significant intervening use of or materially
improves the car, you generally can deduct its fair market value. A list of
charities can be found Here.
Boats, aircraft, and other vehicles.
These rules also apply to donations of boats, aircraft, and any
vehicle manufactured mainly for use on public streets, roads, and highways.
Acknowledgement required.
If the claimed value of the car is more than $500, you must have a
written acknowledgement of your donation from the organization and must attach
it to your return. If you do not have an acknowledgement, you cannot deduct
your contribution.
The acknowledgement must include the following information.
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Your name and taxpayer identification number.
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The vehicle identification number or similar number.
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A statement certifying the car was sold in an arm's length
transaction between unrelated parties.
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The gross proceeds from the sale.
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A statement that your deduction may not be more than the gross
proceeds from the sale.
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The date of the contribution.
However, if there was significant intervening use of or material improvement
to the car by the organization, the acknowledgement does not have to include
the information in items 3, 4, and 5 above. Instead, it must contain a
certification of the intended use of or material improvement to the car and
the intended duration of that use and a certification that the vehicle will
not be transferred in exchange for money, other property, or services before
completion of that use or improvement.
This acknowledgement must be provided within 30 days of the sale
of the car or, if there is significant intervening use or material improvement
of the car by the organization, within 30 days of the contribution.
The organization also must provide this information to the IRS.
Donations of inventory.
These rules do not apply to donations of inventory. For example,
these rules do not apply if you are a car dealer who donates a car you had
been holding for sale to customers.
More information. The
IRS expects to issue more guidance on these rules early in 2005. To find out
if that guidance has been issued, check the Internal Revenue Bulletin or www.irs.gov.
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