Question

Jay drives his old car to charity. The charity then sells the car at an auction. Describe the tax treatment for donated vehicles. What amount, if any, can Jay put down on his taxes as a charity donation for this donated vehicle?

Answer 1

TAX TREATMENT OF DONATED VEHICLES

JAY CAN PUT DOWN ON HIS TAXES AS A CHARITY DONATION FOR HIS VEHICLE BY LAW.

FOR EXAMPLE:-

MARKET VALUE OF CAR IS RS $4500

SALE VALUE OF CAR THROUGH AUCTION IS $3000

IF THE CHARITY SELLS THE CAR AT A SIGNIFICANT DISCOUNT TO A NEEDY INDIVIDUAL OR KEEPS THE CAR FOR ITS OWN INTERNAL USE, THEN YOU CAN CLAIM A DEDUCTION FOR ITS FAIR MARKET VALUE.

IF THE CHARITY SELLS YOUR CAR SELLS FOR $500 OR LESS, YOU CAN DEDUCT $500 OR YOUR CAR’S FAIR MARKET VALUE, WHICHEVER IS LESS. FOR EXAMPLE, IF YOUR CAR IS VALUED AT $650 BUT SELLS FOR $350, YOU CAN DEDUCT $500.