Good Records Necessary When Making Car Donation

Donating a used automobile or boat to charity benefits a good cause while providing a tax deduction. Care must be exercised, however, in order to avoid an IRS challenge to the donation.

When property is contributed to a qualified organization, the amount of the charitable contribution is the property's fair market value - or the price that a willing buyer would pay a willing seller - on the contribution date. There are commercial guides avail-able, commonly called "blue books," which provide estimated automobile values based on dealer aver-age prices. These prices are not "official" and are not considered to be qualified appraisals. "Blue book" values must be adjusted to reflect the actual condition of the automobile. For example, if an automobile needs extensive repairs, the estimated cost of those repairs must be deducted from the "blue book" value to arrive at the true fair market value of the charitable contribution. If the value of the automobile is greater than $5,000, you must obtain a qualified written appraisal from a qualified appraiser. Except for inexpensive small models, the value of boats should be based on an appraisal by a marine surveyor because the physical condition is critical to the value.

It is important to keep written records for each item of donated property, including:

Name and address of the donee organization

Date and location of the contribution

Fair market value of the property at the time of the contribution and how it was determined or a signed copy of the appraisal

A receipt from the charitable organization de-scribing the condition, model and year of the vehicle

Records to show that the vehicle was in running condition when donated (a photograph, repair bills and/or tentative written offers by car dealers)

The original cost of the property and/or how the property was obtained

The value of the contribution is deducted as an itemized deduction and thereby reduces...