Fair market value is out, while the actual sale price is in for setting car-donation write-offs.
Clearing your old car out of the garage to make room for thelatest and greatest wheels on the block can be a serious hassle.You have to pay for an advertisement, wait for strangers to call,haggle over the price and, assuming you sell the car, pray that thebuyer doesn't call back claiming it immediately broke down.Sometimes it's easier to trade the vehicle in or, asthree-quarters of a million Americans do every year, donate theol' hunk of junk to charity.
Donating has its advantages. It's simple, since manycharities offer pickup services; it makes you feel like a realphilanthropist, since you're giving a car, after all, and notjust writing a check; and it can generate a tax write-off. But asof January 1, things got more complicated on that last point. Thecorporate tax bill President Bush signed into law last fall camewith strings attached for car donors. Namely, the amount you candeduct for the value of the vehicle almost certainly dropped when2005 rolled around.
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