Tax Quote of the Week

"Most voters would rather have their purse or wallet stolen than be audited by the IRS."



Gifts of Cars - Donors

The IRS has released an updated Publication 4303, A Donor's Guide to Car Donations.

For gifts of cars after December 31, 2004, new rules apply. Generally, if a charity plans to sell the car, then the donor will receive a written acknowledgment that states that he or she will receive a charitable deduction for the gross sale proceeds. If the charity uses a car for its exempt purpose or materially improves the car, then the donor may receive a receipt for the vehicle and deduct the fair market value.

Donors should exercise caution in selection of the charity. The charity should be exempt and listed in IRS Pub. 78, Cumulative List of Organizations. This is available online at www.irs.gov/eo.

In addition, the donor must exercise care in determining the value of the car. The value of the car will not necessarily be the "Blue Book" value, but will be the actual market value. The market value must reflect the mileage and condition of the vehicle. IRS Pub. 561, Determining the Value of Donated Property, may prove helpful in setting the value for a vehicle deduction when it is going to be used by the charity in its exempt function.

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