Nilodop wrote:Several thoughts:
This goal A donor inquires if she can donate her car to the non for profit for the Executive Director to use and get a deduction.
is inconsistent with this solution Set up the car donation program. Sold the car and Non profit get the money. Donor gets a tax deduction.
This one (and the first one) Keep the car. Give it to the executive as benefit. Donor gets a tax deduction.
omits that the exec will be taxed on receipt of the car. And raises, to me, whether it's kind of a devious way to get s deduction for the donor for soethingb that's been pre-arranged and is not really for the use of the charity, in that I assume they were not planning to give the exec a car. It's a step transaction, contrived for a tax benefit.
What's wrong with the donor's selling the car and donating the proceeds?
My client indicated that the Exe Director probably does not want to upset the donor and tries to find a solution.
You read my mind. I was uncomfortable with my own recommendations because I keep questioning the motive behind the minds of the donor and even the Executive Director.
a/ So if you were me, would you tell the client straight out that keeping the car is possible but there are tax consequences and it does not look right. Do you think it will jeopardize the exempt status (giving the exe director a car to use which mainly would be for personal and occasionally for charity purposes)?
The Exe Director has no pay at the moment. The client suggested that the car could be a benefit given to the exe director as compensation.
b/ The charities really do not need the car in their core programs. Can they still take the car and then give it to the Exe Director as benefit/compensation? Does that look legit at all?
c/ I will also take your suggestion of recommending the donor to sell the car and donate the money.
d/ Selling the car and give to the charity
I think that the donor may think that it would be a waste because his car is quite new. He may really want to give it to the exe director to use but that would mean that he may have gift tax issue. That may be the reason my client asks if the charity can accept the car.