A donor is entitled to a charitable contribution equal to the fair market value of the donated vehicle if the church then uses the vehicle to substantially further its regularly conducted activities (the use must be significant).

Establishing the “fair market value” of the donated vehicle is the responsibility of the donor, who may access established used-vehicle pricing manuals for identical make and model vehicles, taking into consideration the vehicle’s mileage and condition. The church should provide a written acknowledgment of the donation within 30 days and should also issue a Form 1098-C to the donor and to the IRS documenting the facts of the donation and the vehicle.

If the church does not use the donated vehicle to substantially further its regularly conducted activities, but instead sells the vehicle, the donor is entitled only to take a charitable contribution in the amount of the lower of the fair market value (discussed above) or the sales proceeds of the sale of the vehicle by the church. Again, the church should issue a written acknowledgment of the donation to the donor within 30 days and should issue a Form 1098-C to the donor and to the IRS documenting the facts of the donation and the vehicle, including the amount of the vehicle’s sale by the church.

This article was originally published on ag.org and has been adapted with permission. The purpose of this FAQ is to provide basic information regarding church administration. Information contained within is generic in nature and is intended as a guide, not a substitute for seeking professional advice specific to your church or any state laws. If you have explicit concerns, please consult a professional.