Car Donations

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Car Donations

Tax Tip 2005-59, March 24, 2005

The IRS reminds taxpayers that the rules for taking a tax deduction for donating cars to charities have changed for 2005. The American Jobs Creation Act of 2004 has altered the rules for the contribution of used motor vehicles, boats and planes after Dec. 31, 2004. Starting then, if the claimed value of the donated motor vehicle, boat or plane exceeds $500 and the item is sold by the charitable organization, the taxpayer is limited to the gross proceeds from the sale.

In 2004, however, the new rules did not apply. Under the rules in effect for 2004, taxpayers are able to deduct the fair market value of the contributed property.

On 9-1-05 the IRS released final drafts of Form 1098-C Contributions of Motor Vehicles, Boats, and Airplanes with instructions http://www.irs.gov/pub/irs-pdf/f1098c.pdf http://www.irs.gov/pub/irs-pdf/i1098c.pdf

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