Boat Donation Guidelines
Boats donated to a charity can help enrich the lives of children and community members who may not otherwise have the opportunity to experience everything that sailing has to offer – Especially in the Ocean State. Your donation may also qualify for a significant tax deduction.
An individual or a couple filing jointly are allowed to deduct up to a percentage of their adjusted gross income as charitable contributions on their Federal tax return. This would include the appraised value of a boat. Most states also recognize the charitable contribution of boats but state rules can vary and a tax professional should be consulted with regard to an individual’s specific State.
When a vessel is donated to a 501(c)(3) non-profit organization, several conditions must be met in order for the donor to deduct the appraised fair market value of the vessel:
- An acknowledgement by the receiving charity that it will make significant intervening use of the vessel stating in detail on IRS form 1098-C what that use will be and that title will be held by the charity for a minimum of three years. – This is the option that Community Boating Center will use.
- If the receiving charity makes material improvements on the vessel as an alternative to “intervening use” then the donor can take the full fair value of the vessel as a deduction. This assumes that the vessel with material improvements increases in value.
- If the charity acknowledges it is accepting the vessel for use by a needy individual or another 501(c)(3) organization then this will also qualify a donor for a charitable deduction of the full appraised value.
- A donated boat with a value over $5,000 must be appraised within 60 days of the actual donation. This is usually done by a certified marine surveyor/appraiser. Cost of an appraisal can vary with the type of boat, its location and size, but generally it will run between $15.00 to $25.00 per foot of boat length.
- Donation papers are usually formalized with a Deed of Gift, IRS forms 1098-C and 8283. The 8283 document is signed by both the receiving charity and by the appraiser affirming its appraised value. If at any time prior to the three year holding period a boat is sold then that must be reported by the donee on IRS form 8282. A copy of this must also be sent to the donor.
Once a 501(c)(3) organization receives a Deed of Gift for a specific vessel, complete responsibility transfers in its entirety to the receiving charity. All ongoing costs such as yard bills, maintenance, insurance and transport become the responsibility of the charity.
Boat Donation – Statement of Significant Intervening Use
Once you have decided that Community Boating Center is a good fit for your boat donation, there is some official paperwork that needs to be completed by law. In particular, IRS form 1098-C Contributions of Motor Vehicles, Boats, and Airplanes will be completed by CBC. One copy will be sent to the IRS, you will receive a copy, and CBC will retain a copy for our files. Please note that your tax identification number (often your social security number) is required for this form.
This form is fairly straightforward, however one item is particularly important in order for you to receive the full market value of your donation as a tax deduction as allowed by law – The “significant intervening use” clause. Community Boating Center will certify, via IRS form 1098-C, that it intends to use vs. immediately sell the boat for profit. This distinction is important to the IRS and to your rights as a donor to see that the boat is used as you intended and to maximize your donation value as allowed by law. Please consult your tax advisor for details.
Community Boating will fill out the appropriate line items on IRS form 1098-C as follows:
- 5a CHECKED: Donee certifies that vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use
- 5c Donee certifies the following detailed description of material improvements or significant intervening uses and duration of use: “Community Boating Center certifies an intended significant intervening use of this vessel in our non-profit sail training and instructional programs for a period of no less than (3) three years.”
- 6d Did you provide goods or services in exchange for the vehicle? “No”
Feel free to contact John O’Flaherty, Executive Director, at 401.454.SAIL (7245) or firstname.lastname@example.org if you have additional questions or we can assist you in working through a boat donation. We are a 501(c)(3) organization that supports many of our programs through boat donations.
Thank you again. CONTACT CBC