Tax Blog

Our tax blog is dedicated to CFOs, Tax Directors and Business Owners looking to improve profitability, grow their business or implement a succession plan. At Armanino, we see the tax function as a key strategic tool—as nothing less than a vital means of moving you and your company forward. While we excel in making sure our clients meet regulatory requirements—both domestic and global—that just scratches the surface of what we do.

May 30, 2017

Donating a Vehicle Might Not Provide the Tax Deduction You Expect

Posted by Armanino Tax Team

All charitable donations aren’t created equal — some provide larger deductions than others. And it isn’t necessarily just how much or even what you donate that matters. How the charity uses your donation might also affect your deduction.

Take vehicle donations, for example. If you donate your vehicle, the value of your deduction can vary greatly depending on what the charity does with it.

Determining Your Deduction

You can deduct the vehicle’s fair market value (FMV) if the charity:

  • Uses the vehicle for a significant charitable purpose (such as delivering meals-on-wheels to the elderly),
  • Sells the vehicle for substantially less than FMV in furtherance of a charitable purpose (such as a sale to a low-income person needing transportation), or
  • Makes “material improvements” to the vehicle.

But in most other circumstances, if the charity sells the vehicle, your deduction is limited to the amount of the sales proceeds.

Getting Proper Substantiation

You also must obtain proper substantiation from the charity, including a written acknowledgment that:

  • Certifies whether the charity sold the vehicle or retained it for use for a charitable purpose,
  • Includes your name and tax identification number and the vehicle identification number, and
  • Reports, if applicable, details concerning the sale of the vehicle within 30 days of the sale.

For more information on these and other rules that apply to vehicle donation deductions — or deductions for other charitable gifts — please contact us.

The tax decisions you make today can affect all aspects of your professional and personal life. We make it a priority to understand what you have in mind for your company, your family and yourself. Armed with this information, we carefully coordinate your tax, retirement, estate and financial planning needs to help you achieve your specific goals.

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