can't get TurboTax to accept donated car value

[johnsfam]

Hello - we donated a car in 2019 to an organization, and did receive a 1098-C.  Box 5a is checked indicating that they will make material improvements or significant intervening use.  Box 5C says "used as a training vehicle by students in the auto technical program" and therefore we may use fair market value as our deduction.  None of the 4a, 4b, or 4c boxes are filled in.  Box 7 is blank.  

We conservatively value the car at $2000.

When I enter this into Turbo Tax, it tells me that because the 1098-C statement value was $0, TurboTax will change what we've entered to match the 1098-C unless we qualify for one of the exemptions ... which I'm assuming we do - the charity made material improvement to the vehicle before we sold it.  We've selected this exemption, but as we continue to the next screen, TurboTax still has the value of the donation at $0 and no matter what I do, I cannot seem to get it to accept a $2000 donation.  What am I doing wrong?  Thanks so much for any help!! 

[DaveF1006]

Please follow the instructions in the following Turbo Tax link regarding instructions on how to report the donation. 

As long as your 1098-C reports your donated car as "0", that is the amount that is the value of the donation.  There is no way to get around that. I would suggest that you request a corrected 1098-C from the organization. 

[johnsfam]

Thank you for your reply!

Before writing here for help, I had read the instructions at the link you provided.  The organization we donated the car to receives MANY cars, so I can't imagine they did the form wrong.  Is the price in box 4 supposed to be the value of the donated car, or is that what they supposedly sold the car for?  They weren't going to sell it because it was going to be used to teach students how to do mechanical and auto-body repair.  Since they didn't sell it, that means we can't take it as a tax deductible donation?

[JulieS]

If the charity did not sell the car, you are allowed to deduct the Fair Market Value (FMV), or what you paid for it, whichever is less.

I think the problem may have to do with the screen titled, Your Entered Value Is Different. If you select None of the above, the program does not show any deduction for the vehicle. 

It may not sound quite right, but try the third choice, The charity gave or sold the vehicle at a reduced price to a needy individual. 

This allows the FMV to be used for your deduction, instead of the amount in box 4. In addition that phrase,  The charity gave or sold the vehicle at a reduced price to a needy individual, doesn't appear on Form 8283.

[johnsfam]

THANK YOU!!!!

[gtalms]

Hi JulieS:

I believe that your reply is incorrect and is not responsive to the problem that JohnsFam described.

His (and my) situation is that the car is donated to a school and the school uses the car to train students in car repair.  To quote from the IRS instructions for Form 1098-C, "For this purpose, use includes providing transportation on a regular basis for a significant period of time or significant use directly relating to training in vehicle repair."

If I understand your reply, you suggest stating that the vehicle will be passed on to a needy individual. This would require 1098-C box 5b to be checked, which would be wrong.

This looks to me like a bug in TurboTax. Either explain it better or please get TurboTax to fix the bug.

Thanks

[gtalms]

It looks to me like you have discovered a bug in TurboTax.  If the charity does not sell the car, then there is generally no way for it to document the Fair Market Value.  The bug is that TurboTax forces the value to $0 unless you fudge the data and say that they sold the car when in reality they did not.

[JosephF8]

To expand a little on what JulieS says above. In the above scenario checking either The Charity made a significant use or material improvement will allow the deduction.

[akeerbs6]

Yes but what if the organization doesn't sell the car and the intention is that they are going to use the car for their charity work?  checking the box saying that they made significant improvements before they sold it isn't quite correct in this context.  I had someone tell me that you can place it as a personal property donation and use FMV as the donation.

[DianeW777]

@akeerbs6  You could choose to do that, but since the IRS requires knowledge of a gift of a vehicle that would not be the correct way to enter the transaction.

If you indicate you did not receive the Form 1098-C you will be allowed to proceed with the entry by selecting a check box that you will get an acknowledgement before filing your return.  See the image below.

By using this method you are adhering to the requirements and letting the IRS know that you gave a vehicle as a charitable donation.

[akeerbs6]

@DianeW777 DianeW777 The form is not the issue.  I can get the form.  The problem is that the way this is set up is only for situations where when you donate the vehicle the organization sells the vehicle.  That is not the case with this donation.  I bought it for them donated it to them and they are still using it.  The questions under vehicle donation do not allow for me to deduct the cost of the vehicle because all of the choices are around how much the organization gets when they turn around and sell the vehicle.  Does this make sense?

[akeerbs6]

@DianeW777  When Turbo Tax asks me if I have a 1098-C or a written statement certifying the donation of the car, I fill out the information indicating that the charity is using the vehicle by checking box 5a and also 5c and indicating that the vehicle is being used by the charity.  It then states "Your Entered Value is Different" because there is no sales price to put in box 4b because the charity did not sell the vehicle.  Under the choices for this section, it includes "the charity made significant use of the vehicle before they sold it", "the charity made a material improvement to the vehicle before they sold it" "the charity gave or sold the vehicle at a reduced price to a needy individual" and "none of the above".  Because the charity is keeping and using the vehicle and has not sold the vehicle, if I select "none of the above" I then get no credit for the donation.  This does not seem correct.

[DianeW777]

@akeerbs6 I do understand.  The Form 1098-C does not allow a value when the charitable organization is not selling the vehicle. And none is required on the form.

For the reasons you mentioned you are not getting your allowed deduction so steps were provided to make that happen for your tax return with all the required criteria.  There is no tax law requirement for the Form 1098-C to be completed with your tax return and the IRS will have a copy just like the one you have.

• The fact that Box 5a is checked 'Donee certifies that vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use'  allows you to check the box on the following screen which says: 'The charity made a material improvement to the vehicle before they sold it' because they do say essentially the same thing.

I do appreciate you providing your example and details in an effort for potential change for clarity.