The Ins and Outs of Vessel Donation
People donate their boats to charitable organizations for a lot of reasons. Some want to get out from under the expenses of ownership and score a tax deduction at the same time. Others don’t have the time to sell it. Some have overinvested and know the market will never repay them, so instead of swallowing the bitter pill of a big loss, they choose the altruistic route.
Boat donations are an excellent means of philanthropic giving, but the process isn’t as simple as some people think. It has to be done right with some planning, research, and the advice of a tax professional. By crossing the t’s, you can turn your classic vessel into a gift that helps others without giving yourself the headache of a financial disappointment. In order for you to qualify for a deduction, you need to assure the charity that gets your donation must be an IRS-approved §501c3 organization. You can check our status through IRS Publication 78.
To maximize the deduction you can take, you’ll want to claim the “fair market value” of your boat, which will be determined by an appraisal from a certified marine surveyor. For boats with a value greater than $5,000, an appraisal is mandatory. However, to claim the fair market value of your boat, the IRS says the vessel will not be sold by the charity prior to “significant intervening use.” Essentially, that means that if the boat isn’t used by the nonprofit on a regular basis and is subsequently sold by the charity in less than three years from the date of donation, the IRS will restrict your deduction to the amount the charity received for the sale. That’s a problem for you if the liquidation price is much lower than the fair market value originally claimed.
This type of situation is not rare and it occurs because many charities aren’t in the business of using boats. They’re more interested in turning the vessel into cash as quickly as possible. The best way to avoid this is to find out what the charity’s intentions are for the boat before you make the donation.
We have turned down several boats. Some donors want us to hold their boats in our program to use, but we can’t always do that and we tell them so up front. Some boats are not in restorable condition; others are just not the right fit for our program. Some donors are hoping only for the biggest appraisal they can get with no altruistic motive at all. When that happens, the relationship doesn’t really work. There has to be the motivation of giving at some level. It’s not just about getting a big tax deduction. That does come into play, but the gift has to work for both the charitable institution and the donor.
People donate their boats to charitable organizations for a lot of reasons. Some want to get out from under the expenses of ownership and score a tax deduction at the same time. Others don’t have the time to sell it. Some have overinvested and know the market will never repay them, so instead of swallowing the bitter pill of a big loss, they choose the altruistic route.
Boat donations are an excellent means of philanthropic giving, but the process isn’t as simple as some people think. It has to be done right with some planning, research, and the advice of a tax professional. By crossing the t’s, you can turn your classic vessel into a gift that helps others without giving yourself the headache of a financial disappointment. In order for you to qualify for a deduction, you need to assure the charity that gets your donation must be an IRS-approved §501c3 organization. You can check our status through IRS Publication 78.
To maximize the deduction you can take, you’ll want to claim the “fair market value” of your boat, which will be determined by an appraisal from a certified marine surveyor. For boats with a value greater than $5,000, an appraisal is mandatory. However, to claim the fair market value of your boat, the IRS says the vessel will not be sold by the charity prior to “significant intervening use.” Essentially, that means that if the boat isn’t used by the nonprofit on a regular basis and is subsequently sold by the charity in less than three years from the date of donation, the IRS will restrict your deduction to the amount the charity received for the sale. That’s a problem for you if the liquidation price is much lower than the fair market value originally claimed.
This type of situation is not rare and it occurs because many charities aren’t in the business of using boats. They’re more interested in turning the vessel into cash as quickly as possible. The best way to avoid this is to find out what the charity’s intentions are for the boat before you make the donation.
We have turned down several boats. Some donors want us to hold their boats in our program to use, but we can’t always do that and we tell them so up front. Some boats are not in restorable condition; others are just not the right fit for our program. Some donors are hoping only for the biggest appraisal they can get with no altruistic motive at all. When that happens, the relationship doesn’t really work. There has to be the motivation of giving at some level. It’s not just about getting a big tax deduction. That does come into play, but the gift has to work for both the charitable institution and the donor.
Here are some helpful downloadable documents:
| marine_surveying__surveying_wood_hulls_-_old_boats_and_yachts.pdf |
| irs_4303_donors_guide_to_vehicle_donation.pdf |
| publication_526_charitable_contributions_for_2015_returns.pdf |