| Working out the fair market value of a car or | | | | Now, receipts are required if the donation is |
| boat that you would like to donate to charity can | | | | valued at over $250 and a statement is needed |
| be a difficult process. The IRS clamped down on | | | | as to what the car sold for. If, after donation, the |
| tax fraud several years ago and the rules for | | | | car is sold, it is now only possible to claim the |
| determining exactly what the 'fair' market value | | | | same amount as the sale price to the NPO. If the |
| have also changed. | | | | car is actually used by the charity, then a donator |
| So, donating to a non-profit organization used to | | | | can claim the real fair market value (the same as |
| mean finding out the value of your vehicle from | | | | if you'd sold the car yourself). Confused yet? |
| the Kelley Blue Book and the actual 'condition' of | | | | If a vehicle is sold by a charity in the first two |
| your vehicle was almost disregarded. This was | | | | years after receiving it, then they must send a |
| good for the seller but cost the IRS over | | | | Form 8282 to you, informing you of what has |
| $640,000,000 in 2000 alone! Many cars were | | | | happened to the car. But don't panic, you won't |
| almost (or were!) unroadworthy, but this didn't | | | | be required to change anything regarding your |
| stop 3rd-party charity agents from helping people | | | | taxes. |
| to claim the 'fair' market value in the form of tax | | | | Also, you should always take pictures of your |
| deductions, take the car away for free and avoid | | | | vehicle so that you have some proof of its fair |
| scrap yard fees. Quite a good deal, I hear you | | | | market value and if it has a value of over $5,000, |
| say! | | | | then you will also need a written independent |
| The IRS had to clamp down on the 'fair market | | | | appraisal. The fair market value can also be |
| value.' Some agents were taking 70% of the sale | | | | claimed if the vehicle is to be fixed up and then |
| price in so-called 'service fees.' When the cards | | | | sold. |
| were eventually sold, the price differential was | | | | So, give the situation some thought if you are |
| huge! The Kelley Blue Book requires that a car | | | | thinking of donating a vehicle to a charity. It's |
| has to be running in order to even get into the | | | | really not that difficult, but you do need to be |
| 'poor' rating. The fair market value price was | | | | aware of the main changes, instigated by the IRS, |
| over-inflated compared to what a seller might | | | | as outlined above. |
| have got by placing an ad in the newspaper. | | | | |