USPS Gets Nothing From Senate Tax Bill – Could it be because an organization that already has a legal business monopoly, can raise its prices in the face of declining quality of service, and can already count on taxpayer dollars to bail out its ineptitude, doesn’t really deserve any more breaks?

Q:

Dear Tax Guru: Could you please advise whether you are aware of whether the clean fuel deduction for hybrid vehicles is or will be available in 2005 for the Ford Escape hybrid? I know that the Toyota and Honda hybrids are eligible. Thank you in advance for your time.

A:

As you probably know from the IRS website, they have only officially endorsed the Honda and Toyota models for this special deduction. I’m not aware of which other vehicle models IRS is working on for future eligibility. If anyone would be extremely interested in having the Ford Escape qualify, it would be Ford. I checked their website and can’t find any mention of their working toward this goal. I would think that this would be a big selling point for them; so if they aren’t discussing it as a possibility, they are probably not pursuing it.

After my earlier message to you, I did a search on www.AutoBlog.com and found several articles about the Ford Escape; but none of them mentioned it qualifying for the special tax deduction.

That’s all I can see on this issue.

Good luck.

Kerry Kerstetter

IRS probes NAACP leader’s speech – Don’t expect anything to happen here.  Leftist charities are allowed to get involved in politics without any repercussions all the time. If it had been a conservative organization doing this, it would obviously be a very different story.

Shift Toward Flat Tax Continues

Snopes.com has a good explanation of how the new rules are supposed to work.

I received the following from a client earlier this week:

My husband has acquired a truck that he would like to give to a church as a donation.  The value of the truck is $10,000.00.  He is wanting to know if we can donate about half of the value and except payment from them for the rest.  Also, I can’t remember if there is a cap on the amount of charitable contributions per tax year.  I believe year to date we have given approximately $5,000.

My Reply:

There is no dollar limit on deductions for charitable donations.  There is an annual limit of 50% of your AGI, with any excess carried over to the next year.

The rules for donating vehicles were just changed a bit last week in order to cut down on people claiming high Blue Book values for vehicles that were sold off by charities for much less.  They don’t actually take formal effect until 1/1/05; but following them now wouldn’t be a bad idea as protection against IRS challenge.

If the charity turns around and sells the vehicle after you give it to them or sell it to them at a discount, they must give you a written statement of what that sales price was, which will become the fair market value for your donation.  If you sell the truck to them for less than this amount, the difference can be claimed as a charitable donation.

If the charity actually keeps and uses the vehicle, the value will need to be based on an appraisal if more than $5,000 is being claimed, and other methods (Kelly Blue Book, newspaper ads) if the value claimed is less than $5,000.

Let me know if there are any other questions.

Kerry

Of the 58 counties in California, there are only seven left that will allow people to transfer in their lower property tax base from other counties.