| Although the laws were changed back in 2005 to | | | | would sell for if an ad was put in the paper, and what |
| counteract instances of tax avoidance, it is still possible | | | | was being claimed as a "fair market value". This led to |
| to claim the "fair market value" of any car, boat, trailer, | | | | the laws being changed in 2005. There is now a |
| RV or truck that you donate to a non-profit | | | | receipt required for any gift of a value exceeding |
| organization (NPO). However, you do need to make | | | | $250, as well as a written declaration of the amount |
| sure that you are determing that "fair market value" | | | | that the car actually sold for (over $500) or the use |
| according to current legislation. It is understandable that | | | | that it was put to. This means that if the car is sold as |
| you should consider that a value quoted by the Kelley | | | | its first use after being donated, you are only permitted |
| Blue Book could be used as a "fair market value" - | | | | to claim the actual amount that the charity realised on |
| indeed, many tax professionals also considered this to | | | | the sale of the vehicle. On the other hand if, instead of |
| be the case. Howevfer, the IRS has different ideas of | | | | being sold, the vehicle is used as is, you may deduct |
| the definition to be used. Many vehicles donated to | | | | the real market value, determined as the amount you |
| charities are in a condition that could be fairly described | | | | would have got had you actually sold the vehicle |
| as lower than "poor". Some third party, for profit, | | | | instead of donating it. This means that if your car is |
| agencies were advertising for, and accepting, cars | | | | given to a needy person for their own use, your |
| regardless of whether they ran or not. The lucky | | | | deduction value could increase many times over. |
| owner saved on the scrapyard fee, got the car picked | | | | Further to this, if the car is sold by the charity during |
| up free and then claimed the "fair market value" as a | | | | the first two years of ownership, the charity will need |
| tax deduction. It is estimated that this practice cost the | | | | to send you a Form 8282 letting you know what |
| IRS $640 million in 2000. These practices led to some | | | | happened to your donated vehicle. You don't need to |
| agents skimming up to 70% off the top of the sale | | | | change anything on your taxes however. It is always a |
| price in "service fees". The difference in the true value | | | | good idea to take a range of photographs of the |
| soon became apparent when the vehicle was sold, | | | | vehicle, both inside and out, to back up any claim that |
| and since most of them ended up on the wholesale | | | | you make. If your vehicle is valued at more than $5000 |
| market, the difference became even more noticeable. | | | | you will need to get an independent appraisal in writing |
| When using the Blue Book, even a "poor" rating | | | | to back up your claim. Bear in mind that many people |
| requires the car to be a runner. It is obvious that there | | | | price older vehicles to sell quickly, so take this into |
| was a major difference between what these cars | | | | consideration what fixing your "fair market value". |