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New Reporting Rules Affect Donation of Big Ticket Items
In an effort to stem perceived abuses, the American Jobs Creation Act of 2004 puts more limitations on the donation of motor vehicles, boats and airplanes after December 31, 2004. The new rules specifically apply to these types of items if their value exceeds $500. These new rules are expected to have the effect of curtailing charitable deductions since the deduction will be limited to the sales price if the charity sells, rather than uses, the auto, boat or airplane. The new rules may also make it difficult for the donor to file by April 15 since the charity can't issue the required acknowledgment until it sells any item it doesn't intend to keep and use. Further, significant penalties can now be assessed against the charity for violating the new rules.
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