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The Internal Revenue Service is once ag=
ain
reminding taxpayers that they must obtain a charity’s written
acknowledgment of their vehicle donation before they claim a deduction =
for
the donation. For deductions of more than $500, the taxpayer is require=
d to
attach the acknowledgment to the taxpayer’s return for the year of
the donation.
Effective for vehicles donated to chari=
ty on
or after January 1, 2005, the American Jobs Creation Act of 2004 provid=
es
that, generally, a taxpayer’s deduction is limited to the gross
proceeds from the sale of the vehicle by the charity. The charity must
provide a written acknowledgment within 30 days after the vehicle is so=
ld
that notifies the taxpayer of the amount of the gross sales proceeds.
The IRS is aware that questions have ar=
isen
as to whether the charity must sell the vehicle in 2006 in order for the
donor who donated a vehicle in 2006 to receive a deduction for 2006. The
charity does not need to sell the vehicle in 2006. A taxpayer can take a
charitable contribution deduction only for the year the vehicle is
transferred to the charity, even if the vehicle is not sold by the char=
ity
until a later year. (Only taxpayers who itemize their deductions can ta=
ke a
charitable contribution deduction.)
However, a taxpayer cannot take a chari=
table
contribution deduction of $500 or more for a vehicle donation unless the
taxpayer has received a written acknowledgment of the donation from the
charity and attached the acknowledgment to the return.
If the taxpayer receives the written
acknowledgment after filing the tax return for the year of the donation,
the taxpayer may, after receiving the acknowledgment, file an amended r=
eturn
for that year and claim the deduction on the amended return. The taxpay=
er
must attach the acknowledgment to the amended return.
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