Saturday, January 24, 2004

power take-off, #2

Update to earlier post about donated automobiles as a tax-deductions. I've received bushels from e-mails that compel the conclusion that donating automobiles to charity is indeed far more common than I ever realized.

Two examples. First, from an e-mail from a premium subscriber from Shanty Town, MN:
at the recommendation of our hairdresser, [spouse] and i donated my 1988 ford escort this past summer. we gave it to a local vo-tech, and they estimated its value at over 200 dollars--i think it was about 240. it only had 60,000 miles and it had a functioning radio and cd-player but 240 was still higher than i expected. this doesn't help solve your confusion about those stats, though...but the experience made me think it was common. the vo-tech people acted like this was a routine event.
Second, from a longtime reader in Bellechoir, NE:
We actually donated [spouse]'s old car to our church with the intention of using it for a tax deduction, since the dealer was only going to give us $250 for it, and we knew there was a family in the church who needed it. We got our letter from the church stating the estimated value and all that, and I filed it with my tax papers.

When I got around to filing my taxes, though, I opted to not claim the deduction. I was using TurboTax, and when the program was "evaluating" my forms, it told me that claiming an auto donation was a flag for getting audited... So I went back through my TurboTax, removed the donated car deduction, and I think the difference in my refund was about $100 or so. (I claimed the car's value at $750.) I decided that $100 that wasn't in my pocket anyway* was worth the piece of mind of not having to worry about the G Man coming to my door to ask about the [car name], so I DIDN'T claim.
* note to readers who are fans of behavioral economics: note the example here of the proposition from prospect theory that, despite their rational-choice equivalence, foregoing a gain of $100 seems to be being valued as much less bad than an actual loss of $100.

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