There are so many jokes and puns that might go along with the combination of a motorcycle and a pope. But let's start with the facts: Pope Francis was given a Harley. It was auctioned off earlier this month, and the income was given to a Roman charity. You may consider giving your bike, too. Although US Internal Revenue Service rules do not apply to the pope, you will need to know about them before you consider donating your car, motorcycle, boat, or airplane.
The Harley-Davidson custom Dyna Super Glide motorcycle owned and signed by Pope Francis was sold for $327,000 at an auction in Paris on Feb. 6. It was a gift from Willie Davidson, to celebrate the 110th anniversary of the motorcycle brand that bears his grandfather's name. The proceeds of the auction will go to the charity Caritas Roma, a soup kitchen and hostel for the homeless.
Most charities will accept vehicles that you want to donate and many have programs and processes all set up for that purpose. Still, it is best to check with the nonprofit in advance, as the organization may have a gift acceptance policy that applies to your donation. Keep in mind that you can only deduct charitable contributions if you itemize deductions, using Schedule A of IRS Form 1040. And there may be other limitations to your charitable contribution deductions, so check with your tax person, software provider, or the IRS.
IRS requirements, as spelled out in Publication 4303, differ depending on the value of the vehicle: less than $250, greater than $250, greater than $500, and greater than $5,000. If you are donating a vehicle valued at less than $250 you will need to have records that give the name and address of the IRS-designated nonprofit, the date of the donation, and a description of the vehicle. At this level, although the nonprofit is not required to give you a receipt or acknowledgement letter, you might request one anyway.
For vehicle donations valued above $250, you will need an acknowledgement from the nonprofit that, in addition to the above information, also states:
- You gained no goods or services in return for the donation;
- If you did gain goods or services of any kind, a description and good faith estimate of the value of what you received (which reduces the amount of the deduction); or
- A statement that anything you received consisted entirely of intangible religious benefits.
If the value is more than $500, the written acknowledgement from the nonprofit will also need to state your name and tax ID number, as well as the vehicle ID number. You will need to file a separate form (IRS 8283, Sec A).
If the value is more than $5,000, you will need to file a separate form (IRS 8283, Sec B). In certain cases, you will need to get the vehicle appraised to receive the full deduction.
Most nonprofits will sell the vehicle as soon as possible and use the proceeds. In this case, your charitable deduction is limited to the gross proceeds of the actual sale -- which will be reported to you by the nonprofit to which you made the donation. In the rare case in which the charitable organization is going to use your vehicle for its mission activities, the deduction rules change so that you may be able to use fair market value.
Depending on your circumstance and the vehicle in question, you may want to do as the pope did: rather than donate the vehicle itself, sell it in advance and donate the proceeds as cash to the nonprofit. In this case, he was a skillful donor. Although whether Pope Francis ever rode it is unknown, the pope-cycle sale price was more than 20 times the value of the normal retail for the vehicle without the papal signature and prior ownership. That would be a fine tax deduction, even for a Hells Angel.
Fool contributor Mark Ewert keeps his focus on charitable giving and philanthropy, so don't look to him for investment advice. His new book, The Generosity Path: Finding the Richness in Giving, is now available at your favorite online bookstore.