Tax Tips: The Keys to Car Deductions
by Robert D. Flach
If you donate a motor vehicle to a charity you will be given a Form 1098-C.
Form 1098-C lists the name and Taxpayer Identification Number of the charity, the vehicle identification number of the car, and the date of contribution. It must be issued within 30 days of the date of the contribution or the date of the disposition of the vehicle by the charity.
Additional information is included on the form depending on what the charity does with the vehicle.
1. If the charity sells the car without significant interim use or material improvement, the 1098-C will include the date the vehicle was sold, certification that the sale was an "arm's length" transaction among unrelated parties and the gross proceeds from the sale.
2. If the charity intends to use the car in its operations, or make "material" improvements to the vehicle before selling it, the 1098-C will include a description of the interim use and its intended duration or the intended material improvement and a certification that the vehicle won�t be sold before such use or improvement is completed.
3. If the charity plans to give the vehicle, or sell it at a price that is significantly below "fair market value" to a needy person, the 1098-C will include a certification that the charity will make such a sale or transfer in direct furtherance of the organization's charitable purpose.
The charity can give you a statement instead of the form if it contains all the necessary information.