Car Write-offs Capped

Physician's Money Digest, Nov30 2004, Volume 11, Issue 22

The new tax law tightens up the ruleson cars, boats, or planes that are donatedto charity when the amount claimed ismore than $500. Instead of deducting thefair market value, donors will be limitedto writing off the amount the charityactually makes from selling the item. Thetaxpayer will also have to obtain anacknowledgment of the deductibleamount from the charity. The law isaimed at taxpayers who take huge writeoffsfor clunkers that they give to charitiesand that are later sold, either by the charityor a middleman, for a fraction of theamount deducted. The new rules won'tgo into effect until next year, so if you'rethinking about unloading your old car bygiving it to charity, do it now.