rom time to time people contact ATHS about donating their trucks to the Society. Sometimes these calls are for information about the donation process in general.
Since the Internal Revenue Service rules governing non-cash donations made to not-for-profit groups changed in 2005, this is a good time to review how these rules affect donations of vehicles made to ATHS or other organizations.
The changes were made to the regulations because many organizations were allowing for tax deductions far in excess of the value of the vehicle being donated. The biggest changes were made to the minimum value that needs an appraisal, and the need to establish Fair Market Value (FMV).
When someone wants to donate a vehicle to ATHS, the process has several requirements to meet:
• Offer to donate,
• Determine Fair Market Value,
• Appraisal, and
OFFER TO DONATE
When contacted concerning a donation, ATHS sends the prospective donor an “Offer to Donate” form, which is returned with a description and photos of the vehicle being offered. The vehicle is evaluated, and the donor is contacted for further information.
DETERMINING FAIR MARKET VALUE
The amount of the tax deduction claimed will determine the need to file the IRS Form 8283. However, you also need to establish the FMV of your donation to complete the form.
Fair Market Value is the price a willing, knowledgeable buyer would pay a willing, knowledgeable seller when neither has to buy or sell. In most cases the donor’s deduction cannot exceed the FMV of the vehicle on the date the donation is made. There are other factors that can affect the tax deduction, which are detailed in the instructions for the filing documents.
All vehicles being donated that are valued at more than $500 must have an appraisal made by a certified appraiser. The appraisal must be made by a qualified appraiser in accordance with generally accepted appraisal standards. The appraiser must also complete Section III “Declaration of Appraiser” on the IRS donation form.
The IRS forms used to report donations of this type require ATHS to report each donation and to either (a) keep the vehicle for more than three years or (b) sell the vehicle and report the actual amount received from the sale.
If ATHS elects to keep the vehicle, a statement of “Significant Intervening Use” must be made on the form. If the vehicle is sold in less than three years, the amount received must be reported to the IRS.
The tax deduction claimed by the donor cannot exceed the Fair Market Value on the date of the donation, so if the vehicle is sold in less than three years the donor’s deduction may be reduced to the amount that the vehicle sold for.
This was intended to give our members a basic understanding of the ATHS donation process. If you want to review IRS Form 8283 Non-Cash Donations, you may do so online at www.irs.gov/pub/irs-pdf/f8283.pdf. The instructions for Form 8283 is available at www.irs.gov/pub/irs-pdf/i8283.pdf.
Call (816) 777-0933 for other questions and instructions regarding vehicle donations.