Question

Harmony donated a car to a qualified charitable organization. She purchased the car in 2013 for $28,000. The fair market value of the car when she donated it was $3,750. The charitable organization immediately sold the car for $2,000. They did not significantly use or make any improvements to it. The organization provided Harmony with a Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes. How much can she deduct as a charitable contribution on her Schedule A (Form 1040), Itemized Deductions?

Answer 1

Harmony can deduct the sale price by the charity, which is $2,000, as her charitable contribution on Schedule A (Form 1040).

Step-by-step explanation:

The subject of your question relates to the rules for deducting charitable contributions for federal income tax purposes, as reported on Schedule A (Form 1040), Itemized Deductions. Since the charitable organization sold the car without significant use or improvement, Harmony can deduct the smaller of the car's fair market value ($3,750) or the sale price by the charity ($2,000). Therefore, Harmony can claim a charitable deduction of $2,000 on her Schedule A.