If I donate a vintage car to a museum, there are no proceeds or sale to report on line 4 a through d. Do I consider my value as the gross proceeds?

[zoehowland5]

I am having difficulty entering my donation because TT requires that there be information on line 4 a through d.  The museum where I donated the vintage car will display it and has information on line 5c of the 1098-c.  When I enter the information provided, TT still requires a gross proceeds amount.  How am I suppose to determine gross proceeds when there were none?

[SweetieJean]

Did they do an appraisal? Is the museum registered as an IRS charity?

[zoehowland5]

No appraisal and they are a registered 501(C)3

[SweetieJean]

An appraisal is required if the value is more than $5,000.

[pk]

You also need your basis ( acquisition cost + cost of any improvements you have made over the years ).  Generally your credit is  ( absent any other facts and circumstances) the lower of your  basis or appraisal

[zoehowland5]

I used a basis of $5,000 because I did not get an appraisal while the car was in my possession and the cost of an appraisal at this point would be cost prohibitive since I am in Texas and the car is in Illinois

[zoehowland5]

Turbo Tax insists that I put a gross proceeds amount and since there was not a sale, I don't understand what I am suppose to put in the gross proceeds area.  If I have a value of $5,000 and put in gross proceeds of $5,000, it seems that it would be a wash and I wouldn't receive any credit for the donation.  Is that the way it works?

[pk]

I would have expected that gross proceeds would be ZERO because you received nothing in exchange, other than  the donee's  gratitude. So your basis is $5000, gross proceeds is 0 and therefore your credit for donation is the allowed  percentage  of the value donated subject to 50% AGI limitation. That should work.

[Opus 17]

Basis doesn’t enter into it in this case.  Is box 5a checked?

[zoehowland5]

Turbo Tax will not allow the gross proceeds to be anything but the value that I entered.
Box 5a is not checked

[zoehowland5]

Box 5a is not checked.  Box 5c is filled in

[zoehowland5]

Checking box 5a makes no difference.  I am still getting "Your entered value was $5,000 but the form 1098-C or other statement value was zero. We will change your entered value to match the Form 1098-C amount unless you qualify for one of the following:  The charity made a significant use of 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.  None of the above."  None of the above is the only one that would apply to my situation.

[Opus 17]

Check significant use.   That is the correct response here.  See what happens next.  

[Opus 17]

There are three sets of rules that interact in an unusual way in this case.

First regarding the 1098-C.  When donating a vehicle, you can generally only deduct the lower of the fair market value, or the amount the charity received when selling the vehicle.  (This is box 4).  However, when donating a vehicle to a charity that will use it for their own purposes or give it to a needy person, you deduct the lower of your cost basis or the fair market value.  However, for property that has increased in value since you acquired it, you are also referred to the "special rules for property that has increased in value."

This is capital gain property, and the rules for property that has increased in value say that for tangible personal property, you can only deduct your cost basis unless you donate the item to a charity that puts the item to a "related use."  Donating a classic car to a classic car museum is certainly a related use.  So you can claim a deduction at the fair market value of the car on the date of the donation, even if it has increased in value, and you don't need to worry about your cost basis.

However, a third set of rules says that you can't claim a value of more than $5000 for any donated item unless you have a signed appraisal from a qualified appraiser, you list the donated item on form 8283, and the appraiser and a financially  responsible person from the charity both sign the form.  The signed original form is mailed to the IRS with a special cover page after you e-file (keep a copy for your records of course). 

So in the case of a donation of a classic car to a classic car museum, and as long as the museum does not sell or otherwise dispose of the car for at least one year, then the value of your donation is the fair market value at the time, with a maximum of $5000 if you don't have an appraisal.  You don't need to prove your basis.

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What I don't know is why Turbotax will not allow you to enter the FMV without needed box 4 filled out.  I would not add fake numbers to box 4 since you will be mailing the 1098-C to the IRS after e-filing.   The charity is not required to attest to the value if they are keeping the car, that is your responsibility, they only have to attest to the price they received if they sold it.  So there should be a way to enter the donation without figures from box 4.  Try checking box 5a if it is not checked on your form.