In the good old days individuals where able to donate a car to a charity and receive a tax deduction for the fair value of their vehicle. For example if someone donated a vehicle to charity that was valued at $5000, they were entitled to a tax deduction of $5000 even though the car had a bad motor. You were granted the $5000 deduction even though the charity was only able to obtain only $1000 for the vehicle.
Eventually the IRS caught on and only gave a tax deduction for what the car actually sells for. So the very same car that was valued by Kelly Blue Book for $5000 but was sold to the auction by the charity for $1000 can now only be deducted for $1000 from the individual’s taxes. For more information regarding this please refer to the following links: