Q: A donor wishes to donate their vehicle to the church. What procedure should be followed?
A: A donor is entitled to a charitable contribution equal to the fair market value of the vehicle donated to the church if the vehicle is used by the church to substantially further its regularly conducted activities.
Establishing the “fair market value” of the donated vehicle is the responsibility of the donor and may normally be established by reviewing established used-vehicle pricing manuals for identical make and model vehicles taking into consideration the vehicle’s mileage and condition.
The church should provide a written acknowledgment of the donation within 30 days and should also issue a Form 1098-C to the donor and the IRS documenting the facts of the donation and the vehicle.
If a donated vehicle is not placed into use by the church to substantially further its regularly conducted activities, but is rather sold by the church, the donor is only entitled to take a charitable contribution in the amount of the lower of the fair market value or the sales proceeds.
Again, the church should issue a written acknowledgment of the donation to the donor within 30 days and should issue a Form 1098-C to the donor and the IRS. The 1098-C should document the facts of the donation and the vehicle, and include the amount of the vehicle’s sale.
Instructions and other helpful information related to Form 1098-C (including how to order forms) on the IRS web page.
