What if you donate your car, which is then stolen?

IANAL or tax professional, but I think he should be able to use the KBB value.

When you donate property, you get to deduct the FMV of the item. Most of the time, you can only estimate this based on comparables, and you use KBB for cars.

Sometimes you can get a more specific FMV for your item, by auctioning it off. In that case, you use this value instead of an estimate. But if they can't auction it off for some reason (e.g. it was stolen, the auction is cancelled, etc.), you fall back on the method of estimating.

: > The Consumerist, a Consumer Reports blog, reports on the case of a : > California man who donated a car to charity, only for it to be stolen : > before it could be auctioned off. The blog notes that he does not get a : > deduction for the Kelly Blue Book value of the car, but the amount that : > it sells for at auction. With no auction, what is his deduction?

: IANAL or tax professional, but I think he should be able to use the KBB : value.

: When you donate property, you get to deduct the FMV of the item. Most of : the time, you can only estimate this based on comparables, and you use : KBB for cars.

: Sometimes you can get a more specific FMV for your item, by auctioning : it off. In that case, you use this value instead of an estimate. But if : they can't auction it off for some reason (e.g. it was stolen, the : auction is cancelled, etc.), you fall back on the method of estimating.

: -- : Barry Margolin : Arlington, MA

I am also not a tax professional, but I do know that there have beenissues with people donating total wrecks and claiming the KBB value when it mght wel only go for junk value. I don't know if this has been addressed in the tax law or regs and, perhaps that auciton value gives a better view of the actual value, so if not autioned(because stolen or whtever, that $500 deductin might be the way around that whole issue for the tax ing authorities whoin a sense were being ripped off.

More theoreticcal than practical post, but I just wonder.

Wendy

When you donate your automobile you don't get to deduct it's fair market value if it is sold, rather than being used by the organization. If sold, you get to deduct the amount that it was sold for.

The sales price is often much less that fair market value because those cars are usually sent to auction, which does not command full retail price. Hence the quandary in the original post where the auto was sold before it went to auction.

There are also cases where an auto is donated, not to be auctioned off, but to be used by the charitable recipient (such as a priest). Surely FMV is allowed as a deduction, and KBB would be a valuable datapoint.

Congress changed the rules on car donations a few years ago. Typically, the auto is sold or auctioned off and the charity provides the donor a written acknowledgement stating what the gross proceeds were from the sale. It is the gross proceeds that are the charitable deduction. If the charity decides to keep the car and use it or give it away to a needy individual in furtherance of its charitable purpose, then the donor can deduct the FMV. Again, a written acknowledgement is required from the charity. There are also one or two other exceptions that allow for FMV but they are not relevant. In this instance, the donor is unable to obtain the proper written acknowledgement of either a sale/auction or use by the charity, etc. as the car was stolen. Congress did not include any exceptions to the very specific written acknowledgement requirements included in the law. As such, there is no exception for the theft. The donor is screwed and is limited to the lesser of FMV or $500. See IRC Sec. 170(f)(12).

snipped-for-privacy@verizon.net wrote: : > > The Consumerist, a Consumer Reports blog, reports on the case of a : > > California man who donated a car to charity, only for it to be stolen : > > before it could be auctioned off. The blog notes that he does not get a : > > deduction for the Kelly Blue Book value of the car, but the amount that : > > it sells for at auction. With no auction, what is his deduction? : > : > IANAL or tax professional, but I think he should be able to use the KBB : > value. : > : > When you donate property, you get to deduct the FMV of the item. Most of : > the time, you can only estimate this based on comparables, and you use : > KBB for cars. : >

: When you donate your automobile you don't get to deduct it's fair market value if it is sold, rather than being used by the organization. If sold, you get to deduct the amount that it was sold for.

: The sales price is often much less that fair market value because those cars are usually sent to auction, which does not command full retail price. Hence the quandary in the original post where the auto was sold before it went to auction.

Thanks you both for your replies.

Wendy Baker

so the charity needs to tell the cops "just let the thief have it - he probably needs it" will allow the donor to deduct the FMV, as the charity "decides to give it away to a needy individual in furtherance of its charitable purpose".

On 2014-01-14 14:21, Alan wrote: [...]

Thank you Alan, I had a general recollection of the rule changes and very explicit statutory acknowledgement requirements, but you have provided the necessary IRC reference.

It seems, then, that the tax attorney from the news segment was correct, hooray! (I did not view any of the links provided, I'm going by previous summary comments).

or

The man took his situation to a consumer affairs TV reporter, who consulted a tax attorney, who said that as long as he has a receipt for the donation, he can deduct up to $500. (The donor said the car was worth $2,500.)

or ============ If the charity never took title, I would amend the return (if filed), reversing the contribution and deducting it as a theft loss.

would the taxpayer be able to take a theft loss, since the theft deprived him of his full charitable deduction?

I agree as long as the t/p did not sign the title and hand it over to the charity. I doubt this happened as the article said "After 15 years with his 1999 Dodge Intrepid ES, he didn?t have the space for it, so he signed it over to the charity."

I've read the other replies and disagree that the donation is limited to the lesser of $500 or FMV.

The charity didn't sell the car. That the charity intended to sell the car is irrelevant. Since the charity didn't sell the car, the donor gets a charitable contribution equal to the fair market value of the automobile.

Note. A written confirmation of the donation is mandatory to take any deduction. Get a letter from the charity acknowledging the contribution.

Regards, Bill ~~~~ William P. Brown, CPA, Managing Member Holland & Brown, CPAs, PLLC Certified Public Accountants

That's my reaction, too.

There are times when tax law can not accommodate what you would think is fair or would like to happen. This is one of those cases because the tangible property donated was a vehicle. The charity is unable to provide the written acknowledgement that the code requires for deducting FMV. This acknowledgement is explicitly identified as to content. The car was not auctioned nor it did it have significant use by the charity nor did the charity donate it to a needy person. Any other acknowledgement from the charity allows the t/p to deduct the lesser of FMV or $500.