Aug 25 2008
Ensure You Use The Correct Fair Market Value When Claiming a Tax Deduction for a Car Donation to Charity
To counteract a misunderstanding over the definition of "fair market value" when claiming a tax deduction for donating a vehicle to charity, the IRS made some changes to the legislation in 2005.
It is no longer satisfactory to use the Kelley Blue Book value, as many donated vehicles fall below even the "poor" category in that publication. The value must now reflect the condition of the donated vehicle and also reflect the price that the car would fetch if advertised on the open market.
The extent of your claim for deduction can be largely affected by the use that the vehicle is put to by the charity. If it is sold, then your claim must not exceed the sale price achieved by the charity, despite what you may feel is the actual "worth" of the vehicle.
However, if the vehicle is used by a needy person, then the full "fair market value" can be claimed as if you had sold the vehicle yourself on the open market. However, you need to bear in mind that many low value cars fetch less than their owners think they should.
There are other aspects to be taken into consideration, and you can discover a lot more information concerning fair market value and the whole subject of car donations to charity at http://cardonation4charity.com.
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