The Federal Government encourages donations of property to public, nonprofit charities. The same tax deductions are permitted for donations of property as for cash donations. This is not a tax loophole, but a definite recognition on the part of Congress of the importance of such a gift to a qualified, IRS approved organization.
The Internal Revenue Service distributes several publications to guide the public and their tax advisors in determining the best way to handle property contributions including Publication #526 - Charitable Contributions and #561 - Determining the Value of Donated Property.
I have these forms as well as the form 8283 for donating boats, yachts and ships. If you donate your boat to a qualified organization, you may generally deduct the fair market value at the time of the contribution. The value of your boat is determined by an appraisal from an expert in a field related to your property. The IRS, in their publication #561, suggests using a marine surveyor who is accredited & certified.
Once you have decided to donate the vessel, you must decide which method is the quickest and most financially rewarding, an outright sale or a donation. In looking at a sale, you must take into consideration all of the expenses entailed; dockage, insurance, maintenance, storage, repairs, interest and sale commission are just a few. After you have signed a sale contract and the purchaser surveys the boat, you probably will be met with more expenses. There are always unforeseen repair items that need to be corrected after a potential buyer's marine survey. In most cases, the buyer expects the owner to adjust the sale price downward or have the owner pay for these repairs. Another problem in trying to sell your boat is the time factor. The time of the year in most areas of the country has a great deal to do with the availability of ready buyers. The cold winter months seem to drive prices down and buyers indoors.
By donating your boat, yacht or ship, you avoid these costly expenses. There are no sale commissions to pay and the entire transaction is complete by me in a few days. You do not have to wait six months or a year to find out that your net return is far less than you expected.
If you or your CPA/Tax Advisor needs any questions answered on donating your boat, yacht or ship, contact us.