The NonProfit Tax Prof Blog notes an entry in the Chronicle of Philanthropy, based on recent IRS stats about charitable donations of cars. As most readers are probably aware, prior to 2005 people could donate cars to charities and get a deduction for the fair market value of the donated vehicle, and there was considerable tax administrator concern that the value of donated vehicles was being manipulated to increase significantly the size of the deduction. The American Jobs Creation Act of 2004, however included a provision that limits the deduction to the actual sales price that the charity gets on the sale of the auto, if the claimed amount exceeds $500, except in those instances that the charity gives the auto to a needy individual, uses it itself, or renovates and sells the auto. (The latter two exceptions don't appear reasonable--hard to see why the donor should get a bigger donation for cars that the charity uses or renovates and sells.) See this IRS link for a news release about the Jobs Act change in the law. Result? In 2005 with the new law in effect, there was a 60% decline in automobile donations from 2004, but an 80% decline in the amount of deductions claimed, down from $2.4 billion in 2004 to $470 million in 2005. (There may still be significant donations of old junkers that aren't even counted because there's no valuable deduction.)
Interested in donating? Here are a few links:
- Donate Car for Charity (supports a foundation to aid families);
- Purple Heart (supports veterans);
- 1-800-Charity-Cars (provides appropriate donated cars to needy families, but also auctions cars that are not roadworthy to raise money to repair those that can be);
- IRS Publication 561 (determining the value of donated property).
Recent Comments