Auto Donation - Corp

[BulldogTom]

Client has lots of trucks in their business (C Corp). They drive them until they die and then donate to a local charity. They had 5 vehicles die this year. Fully depreciated. They did not include a donation on the books, just showed as sold for $0 and cleared from fixed assets and accumulated depreciation.

The charity sent them 1098C for each of the vehicles with amounts from $1000 to $1500 on each vehicle.

I know an individual would be able to take the FMV as a deduction (limited to the amount the charity sold the vehicles for), but I am fuzzy on if a corp can take the same deduction.

Thanks in Advance.

Tom

Lodi, CA

[jainen]

>> an individual would be able to take the FMV <<

For an individual or a corporation the deduction for ordinary income property is limited to the lower of FMV or adjusted basis. Typically, the code says it kind of backwards--The deduction is FMV reduced by the amount that would be treated as ordinary income if the vehicles were sold.

Even with capital gains, if tangible personal property like a vehicle, the deduction is FMV reduced by the gain. Generally, only with qualified appreciated stock can you deduct FMV exceeding basis.

[BulldogTom]

Thanks Jainen. I think I have been listening to too many of the auto donation commercials on the radio.

Tom

Lodi, CA