Quote:
Originally Posted by heart_doctor
He's better off writing a check. He can't deduct it because he got something in return. I understand the whole charity thing but the only person who can deduct is whoever donated the car. The purchaser cannot deduct from their taxes.
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If you've made any big purchases at charity auctions in the last few years, you'll want to go back and amend your tax returns, and possibly fire your accountant if you have one -- or maybe get one to avoid making more mistakes like this.
I don't think there was a donor for the car in this case; it seems the charity owned the car prior to the auction, given that it's a BMW charity. Or maybe BMW AG deducted the car as a donation to one of their own charities. But in any case, yes Rick as the buyer can deduct this. He has to subtract the fair market value of the item he received from the amount of the deduction, but the rest is absolutely deductible. Fair market value would probably be MSRP or maybe a bit more because this is the last one, but basically the BMW campaign that owned the car prior to the auction gives him some paperwork indicating the amount of the donation and the value of the item they provided in exchange, and that's his documentation for the IRS. Occasionally the IRS will argue over the accuracy of the valuation of things like this as part of an audit, but otherwise it's worth whatever the charity says it is, and any amount paid over that is deductible. If you've ever donated to Goodwill, they offer to give you the same documentation if you want it for tax purposes (and they'll typically write whatever value you tell them on the paperwork), but people who just take the standard deduction rather than itemizing don't need to bother getting the paperwork.
(Source: My dad is a CPA.)