Donation Car - Fair Market Value
The Value of donation car is one of the issues that donors, charities and IRS struggle with. IRS is pretty firm and clear about donation car value. They say donation car must value in fair market, it means the value buyer pays for donate car and seller accepts it. It can't be full or maximum value which charity or donor refer to automobile guides. For instance, the maximum value of donation car refer to Kelly Book is $1500 but buyer only offers $800, now if seller (donate car charity, donor) accepts the offer, this would be fair market value.
Problem is when charity has provided the automobile donation tax document in maximum price for donor but they sell or auction donation car in much less price than car donation tax write off document and this is unacceptable for IRS, this is not fair market value of donation car. Worse is donor would be penalized not charity.
Basically, encouragement of donate cars to charity, has come from difference of maximum value and fair value of donation car. Because donor not only get rid of unwanted car free in charge but also get tax deduction receipt in full price (when donation car is in excellent condition). So it seems is not fair for government but isn't fair for needy people too?
We don't think so, because since government has been tough lately, the automobile donations rate has been decreased consequently the rate of helping hands has decreased.
If you like to avoid car donation scams and penalties, you have to take your steps with caution. It is necessary before donating automobile, call the automobile donation charity and ask few simple question or even take a little more precise look at their advertisement, you can easily find out about charity organization which is real or fake.
Advertisements like " Car accepting, running or not" is misleading and deceptive. How can charity value not running donation car? but there are exceptions like:
So these things can be clarify on a phone call. Sometimes charities refer donors to Kelly Blue book for donation car value, which is ok if donation car be in exactly same condition of Kelly book car description like mileage, model, year...
We give you some example question, if you making charitable automobile donations (donation car is running):
After you chose your charity, you have to do right documentation for substantiating your car donations.
Problem is when charity has provided the automobile donation tax document in maximum price for donor but they sell or auction donation car in much less price than car donation tax write off document and this is unacceptable for IRS, this is not fair market value of donation car. Worse is donor would be penalized not charity.
Basically, encouragement of donate cars to charity, has come from difference of maximum value and fair value of donation car. Because donor not only get rid of unwanted car free in charge but also get tax deduction receipt in full price (when donation car is in excellent condition). So it seems is not fair for government but isn't fair for needy people too?
We don't think so, because since government has been tough lately, the automobile donations rate has been decreased consequently the rate of helping hands has decreased.
If you like to avoid car donation scams and penalties, you have to take your steps with caution. It is necessary before donating automobile, call the automobile donation charity and ask few simple question or even take a little more precise look at their advertisement, you can easily find out about charity organization which is real or fake.
Advertisements like " Car accepting, running or not" is misleading and deceptive. How can charity value not running donation car? but there are exceptions like:
1- Salvage charity cars for parts and sell the parts.
2- Charity has mechanic shop to repair donated cars and then sell it, give it to needy families or use in house for charity services.
3- Donor like to make a free car donation and doesn't expect any service or automobile donation tax write off benefit in return.
So these things can be clarify on a phone call. Sometimes charities refer donors to Kelly Blue book for donation car value, which is ok if donation car be in exactly same condition of Kelly book car description like mileage, model, year...
We give you some example question, if you making charitable automobile donations (donation car is running):
1) This organization, is charity or fund-raiser?
2)What is usage of donation car?
3) Are you providing tax write off document?
4) How do you evaluate donation car, is it fair market value or base on blue book?
5)If you are fund-raiser, what percentage of donation car goes to charity?
6)Are you in-house charity?, do you have facility to auction donation car?
After you chose your charity, you have to do right documentation for substantiating your car donations.