If you are going to claim a deduction of $500 or less value, you must require evaluating your vehicle’s fair market value on the date of the contribution. Usually, fair market value is the cost a buyer would offer and a seller would take for the vehicle, when both the parties are open to buying and selling, and both parties have considerable knowledge of the relevant facts.
If you consider a vehicle pricing guidelines to ascertain fair market value, ensure that the sales price mentioned for a vehicle that is of the same model, year and make, sold in the same condition, and with the similar accessories and options, as that of your car. In addition, the fair market value of a car must not go beyond the price mentioned for a private-party sale.
No Guideline Provided in IRS Publication 561
Ascertaining the fair market value of your car can be difficult as there is no single (or simple) set of guidelines to consider it. A good decider of the fair market value is the value that the car fetches when sold by the charity, which the donor gave to it. Another way is to compare the cost of the item to the sales price of identical car.
Given these situations, an asset's fair market value should manifest an accurate valuation or assessment of its worth.
In IRS Publication 561 there is no mention of any guidelines to ascertain the amount of a donation that can be deducted, what documentation the donor should retain or how to support the appraisal claim.
Determining Fair Market Value
Ascertaining the cost of donated property would not be that tough if you follow only the fixed formulas, processes and rules which have been discusses above. Generally it is not very simple. Using these strategies you can easily reach an acceptable determination of fair market value of your car. Nonetheless, there is no one formula that can be applied when determining the value of property, but following some basic theories would offer estimated results.
Valuation of your care is not guesswork. You need to consider all the facts and circumstances associated with the care, like its condition, desirability, use, and scarcity etc.
Cost or Selling Price of the Donated Property
The value of the property to you or the real selling price taken by the qualified organization is the ideal way and indication of determining its fair market value. As the scenario in the market keep changing, the cost or selling price of car may drop or shoot if the car was not bought or sold almost close to the date of contribution.
Terms of the Purchase or Sale
The terms of the sale and purchase must be taken into consideration in ascertaining fair market value if they impact the price. These terms also include some restrictions, understandings, or covenants restricting the use or disposition of the car.