Any tax gurus here?

[phantomjock]

Strange question - but it is getting to that time of year, and more specifically:

Has anyone had experience donating a race car, guns, boats, etc. - rather than selling?

I know there are limits to charitable deductions (unless itemizing and then no more than 60%), but it would seem a good way to pass along useful items to organization(s) looking for help. Because it is "property" value is established as "Fair Market" and you'd get the full amount - right? I also know you'd need to find a "valid" organization, and there is paperwork to pass between both you and the charity.

Guess I'm asking if there are any other traps or pitfalls to look out for. Need/use a lawyer or accountant? Anyone gotten "burned?"

Seems like a viable option in a "down" economy.

Thanks in advance.

Cheers - Jim

[EYERACE]

When donating a street vehicle in the past one assigned their own value as something within reason and put together their own paper work to that effect along with a receipt from the organization that got the vehicle showing they got the vehicle - the receiver did not decide the value ......so numbers could be rather fayorable to the donating owner. What the receiver thereafter actually did with the car was pretty much immaterial.....rarely use it, maybe sell it, maybe auction it off, maybe scrap it

Example of now............ when donating, let's say the car will be auctioned by a Charity......at first you get a paper that says you donated it.....later you will get a paper that says how much it went for....and that's the number you'll take for tax purposes. A lot of times now you'll see pretty much fair market value........but occasionally maybe not as much as you thought in the past.

[phantomjock]

EYERACE -

Thank you.
A quick timing question - If the donation takes place in one year and years or so later is sold by the charity - do I have to file an adjustment/amendment? Or is that all on them? They acquire it for $X, then sell for $Y, its their gain/loss - not mine?

Sounds like if they keep and use it, I guess I have the original established market value? And everyone is happy?

Does that sound about right? Almost seems too logical - I may have it wrong!

Thanks again.

Cheers - Jim

[Charles Warner]

You need to make sure the donee is a valid tax-deductible concern. Many are not. Then, the property must be valued by an expert in the field who is an established entity. The receiving charity can not be involved in the valuation.

I donated an F3000 and a Judd CV engine to the Barber Museum in Alabama many years ago. The engine was valued by Clive Chapman (Colin's son and director of Classic Team Lotus) as it had been installed in Mika Hakkinen's race-winning car. The car itself was valued by two established racing shops who had experience in these cars. The valuations must be on letter-head and be clear. Obviously the more professional and detailed they are the more effect they have on the auditor - and you WILL get audited if the donation is substantial. And, you will need a statement from the donee as to the fact they received the donation and their description must match the description on your valuations. Any sloppiness will come back to haunt you. You take the deduction as stated on the valuations. What happens after that is none of your business.

[BorkRacing]

Donating a race car in difficult times doesn't make a lot of sense, unless you and the auditor have unrealistic ideas of the value of your car.

Lets take a FF for an example. You would like to get $20,000 for it.

You donate it and get a $20,000 deduction and say you are in the 35% tax bracket that will give you $7,000 back in your taxes.
Now times are tough so you could only realistically sell it for $15,000. That still puts $11,000 in your pocket after paying income taxes on it (assuming the $15K was total profit and you didn't keep records of the cost of purchasing and/or restoring it).

[EYERACE]

Tough one..........good one. I'll guess your example works like this > >

You donate it to an organization one year, so it's no longer in your possession - but the paperwork statement doesn't arrive until a different year and it reflects the organization arriving at the value that different year via their doing whatever with the vehicle that different year.

Hmmmmmmm.........one of two thoughts but there could be more......

Plan A) Because you have paperwork showing when you donated the vehicle.....You file an amendment to your previous year's return taking the deduction which may then adjust down your taxable you needed to pay and did pay [or it increases a return]......so no matter if you had to pay and did - or got a return...you should be getting money back from the IRS.
Remember there are only so many years allowable for an amendment to be filed - I have no idea as to how many that may be.

Plan B) You take the deduction in that different year regardless of when you surrendered possession of the vehicle.

If it was a street vehicle, sign and date the Title where one does when transfering ownership - and take a picture front and back of the Title thereafter

[BeerBudgetRacing]

Tough one......

Plan A) Because you have paperwork showing when you donated the vehicle.....You file an amendment to your previous year's return taking the deduction which may then adjust down your taxable you needed to pay and did pay [or it increases a return]......so no matter if you had to pay and did - or got a return...you should be getting money back from the IRS.
Remember there are only so many years allowable for an amendment to be filed - I have no idea as to how many that may be.

Plan B) You take the deduction in that different year regardless of when you surrendered possession of the vehicle.

None of the above. Not a tough one. Valued at the time of donation. Period.
You no longer have ownership or tax effects after that.

Consider it a "sale". I'm trading this car for value. That value is a tax deduction.

You need to make sure the donee is a valid tax-deductible concern. Many are not. Then, the property must be valued by an expert in the field who is an established entity. The receiving charity can not be involved in the valuation.

I donated an F3000 and a Judd CV engine to the Barber Museum in Alabama many years ago. The engine was valued by Clive Chapman (Colin's son and director of Classic Team Lotus) as it had been installed in Mika Hakkinen's race-winning car. The car itself was valued by two established racing shops who had experience in these cars. The valuations must be on letter-head and be clear. Obviously the more professional and detailed they are the more effect they have on the auditor - and you WILL get audited if the donation is substantial. And, you will need a statement from the donee as to the fact they received the donation and their description must match the description on your valuations. Any sloppiness will come back to haunt you. You take the deduction as stated on the valuations. What happens after that is none of your business.

YES. Not as 'scary' as Charles implies but he is correct.

Also, the Charity should issue a 1098-C form. They file it with the IRS and give you a copy.
This is a statement of what was donated and the stated value.

[TimH]

Also, the Charity should issue a 1098-C form. They file it with the IRS and give you a copy.
This is a statement of what was donated and the stated value.

..and an attestation that you received no goods or services in return.

[phantomjock]

OK - for a post or 2 there it was looking pretty dark.
But, there are now a few brighter 'rays" to consider.
The bummer is, any amount is decreased based on bracket, and not directly from the AGI.

Thanks for all the insights.
Now I've determined to read the IRS massive works.

REPEAL 16! Make all our lives a bit easier.

Cheers - JIm

[David Ferguson]

I have helped someone donate a race car to a university with a racing program. They had students working on projects on the car, and actually ran it... totally valid deduction...