Stan donates his old car to a charity. He bought the car for $15,000 and now estimates that it is worth $700, but the charity immediately sells it for $450. What can Stan deduct?
a. Incorrect. The charitable deduction for a donation of property that has decreased in value is generally limited to the lesser of the donor”s basis or FMV at the time of contribution. Since both are greater than zero, Stan”s deduction is more than $0.
b. Incorrect. Because the charity sold the vehicle for less than $500, Stan can deduct $500, which is the lesser of $500 or the FMV of the vehicle.
c. Correct. Because the charity sold the vehicle for less than $500, Stan can deduct $500, which is the lesser of $500 or the FMV of the vehicle.
d. Incorrect. Stan cannot deduct the value he thought his car was worth, or $700, because the charity sold the car for less than $500. His deduction is limited to $500, which is the lesser of $500 or the FMV of the vehicle ($700).