If you’re looking for an appraisal for the purpose of donating a vehicle to a charitable organization, here is something you need to consider; how much can you actually sell the vehicles for?
We get requests for donation appraisals all the time and for the most part as a certified appraisers were pretty limited to what the IRS will allow you to write off as a charitable donation.
Prior to 2005, people were able to donate vehicles—usually cars, but also boats and airplanes—to a charity and get a deduction equal to fair market value for items under $5,000 or the appraised value of the gift for items over $5,000. In recent years, the IRS became aware that the “fair market value” provision created an often abused tax loophole for people making a donation to a vehicle donation program. The result, abusive donation schemes as donors reaped unwarranted charitable deductions based upon overly inflated valuations. This has changed and the IRS watches donations much closer than they ever have.
Consider a custom '51 Mercury, cost over $750k to build, donated to the Peterson Museum 2009 for an appraised value of $260k. The client was audited, value of car accepted at $260k by the IRS without discussion or debate and they took his company books and spent 1.5 years digging up other discrepancies for which the client is still writing checks. It’s a one off custom car and there were good comps to support the valuation. The donation raised a red flag at the IRS and while it was a valid donation, it started the audit process.
Is overstating the value of a donated vehicle worth bring an IRS audit to your personal and business tax filings? We don’t think so and while we’ll provide you with a favorable value of you donations vehicle, it will be supported by suitable comparable vehicles.