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Clear All Doubts and Concerns About Boat Donation Before Deciding About It

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October 25, 2017 in Uncategorized

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Keeping in mind that you want to gain the maximum in tax deduction available from boat donation, you have to choose the right kind of non-profit organization. Inability to select the right recipient will not serve your purpose of availing tax deduction, which is the motivation for the charity. Not only must the recipient of the boat qualify as a non-profit organization but also it should typically be engaged in activities that entail the use of boats. Choosing a Scout Troop, marine research organization or boating school is the best way to ensure that you are dealing with the right organization.

The organization you choose should adequately make use of the boat and log all the activities of the vessel. This aspect is critical for you because if the IRS (Internal Revenue Service) questions your claim for the tax deduction, the organization should support you to substantiate the proper use of the vessel by sharing the logs that demonstrate usage of the boat.

Get written acknowledgment

To meet the requirements of IRS for availing tax deduction, you must obtain a written statement from the organization in support of receiving the vessel. Assuming that you claim tax deduction corresponding to the fair market value of the boat, you must also obtain the form 1098-c from the recipient within 30 days of handing over the vessel to them. The form must explicitly state that the organization will not sell the boat unless making good use of it in the intervening period.

The IRS form 8283 (part-IV) must duly support the acknowledgment. The document for Donee Acknowledgement must indicate that the organization will use the vessel for the intended purpose and you have to submit this document along with the tax return.

Selling the vessel before three years

For the donor to avail full tax benefit in terms of tax deductions, the charity must not sell the boat before three years from the date you donate a boat. However, if the charity sells it earlier, it has to inform IRS about the usage of the boat and sale price in the IRS for 8282. The more details the organization provides about the usage, more helpful it will be for the donor in availing tax deductions.

Significant intervening use

The above phrase is substantial in the context of availing tax deduction, but donors usually get confused about it.The confusion arises because there is no definite explanation about what kind of usage represents significant intervening use. According to the IRS charitable organization specialist, the boat must be put to legitimate use for around 100 to 200 hours to justify proper usage. To ensure that the charity will use the boat properly, know about the intended use of them and check with an IRS specialist to ensure that it would suffice to substantiate your claim for a tax deduction.
Donating a boat can give you great satisfaction in helping a cause that you care about while it becomes an excellent source of support for the charity.

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