Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate her old car. Which of the following statements is correct?

a. She can take a tax deduction large enough on an after-tax basis to equal the amount she would have received if she sold the car directly.

b. She can take a deduction greater than the amount for which the charity actually sells the vehicle.

c. She can claim an estimated value for the auto if the charity uses it rather than selling it.

d. The charity is not required to provide her with any information about what they do with the auto.

Question

Jenkins

Business

22 August, 15:55

Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate her old car. Which of the following statements is correct?

a. She can take a tax deduction large enough on an after-tax basis to equal the amount she would have received if she sold the car directly.

b. She can take a deduction greater than the amount for which the charity actually sells the vehicle.

c. She can claim an estimated value for the auto if the charity uses it rather than selling it.

d. The charity is not required to provide her with any information about what they do with the auto.

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Answers (1)

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Shaun Valentine · Answer 1

Option C She can claim an estimated value for the auto if the charity uses it rather than selling it

Explanation:

The reason is that the tax encourages you to make donations because the non for profit organization is doing the same thing which government does, they serve the people. So if the NGO is not selling the old car then the tax says that use the fair value of the asset as a amount donated to the charitable foundation. So the right answer here which includes the use of fair value is only Option C.