Donating cars, clothes, and other depreciating properties

If you are donating cars, clothes or other depreciating properties whose values have declined below your cost, your tax deductions due to charitable giving are usually fair market value. The tax laws of charitable giving tax deductions for cars, trucks, boats, and airplanes are more complicated.

Usual problems

Some donors of cars, trucks, boats, and airplanes claim highly inflated tax deductions from their charitable contributions of vehicles. The charities they donate these vehicles to actually received much less on a sale to raise cash. To prevent the overvaluation and over claiming of tax deduction from charitable giving, the American Jobs Creation Act of 2004 restricted the allowable tax deduction and imposed stringent substantiation requirements for donations after 2004 where the claimed value exceeds $500.

Charitable giving of property worth less than your cost basis

If you are planning to donate stock or other investment or business property worth less than your cost basis, you may consider selling the stock or investment or property and then donate the proceeds. If you donate the property , your deduction is limited to the fair market value and you cannot deduct a loss.