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DONATION GUIDE
Maryland Youth Maritime Academy's donation process is quick and easy. Contact us and let us know that you are interested in donating your vessel. A representative from MDYMA will do a short vessel assessment to determine that the donation is mutually beneficial. We help you with filling out the documents. Title is transferred, and donation form, signed and acknowledgement letter written then Maryland Youth Maritime Academy takes possession of the vessel.
Maryland Youth Maritime Academy has produced this guide to help answer many of the common questions that are asked regarding the donation process for charitable contributions. This information has been compiled from years of answering questions from clients donating property, conversations with state government offices, IRS officials, other non-profit organizations and consulting several publications.
This guide is for general informational purposes only and should not take the place of consulting your professional tax preparer for your specific situation. Our desire is to be helpful to those interested in donating property, if you have questions beyond the scope of this guide, please feel free to contact us. If we do not have the answer, we will be glad to research your question for you and if possible include the answer in later editions of this guide.
1* Introduction
Your Expenses End Now
When selling your boat, add up your costs to find out your real net gain from the sale. Expenses may include:
- Months of slip/storage fees: boats can be on the market for months or in some cases, years.
- Continued Insurance
- Brokerage fees: Brokers work on commission and most have a minimum commission fee.
- Repairs: The sales contract may hold the seller responsible for repairs on items found during the survey.
- Sea Trials: Sea trials are usually at the expense of the seller.
- Advertising: Expenses and time showing the boat if the seller does not hire a broker.
The day your boat transfers to the charity, your expenses stop. This process can happen in as little as 24 hours from start to finish.
Receive The Benefit of A Tax Credit for the Fair Market Value of your Donation.
If you donate your boat to Maryland Youth Maritime Academy, you may receive a tax deduction up to the full market value of your boat. Your total charitable donations for the year must not exceed 50% of your Adjusted Gross Income for that year. If your donation exceeds the 50% limit, you may carry over the excess over the next five consecutive years.
Your Boat Will Have A New Life-
Your boat will go directly toward one of our programs that benefit inner-city teens. Maryland Youth Maritime Academy uses donated vessels to teach on-the-water classes (using power boats, sail boats, and pwc's to name a few ), as well as holding classes on boat care and maintenance and our sailing clubs. From time to time some vessels are sold at fair market value to support these programs . You will have piece of mind, knowing that your boat is benefiting others who would not ordinarily have this opportunities.
2* Benefits of Donating Your Boat
3* Tax Deductible Contributions
"Generally, you can deduct your contributions of money or property that you make to, or for the use of, a qualified organization." : A qualified organization is a nonprofit organization that may be religious, charitable, educational, scientific, or literary in purpose or that works to prevent cruelty to children and animals. You can ask any organization whether it is a qualified organization. They should be able to provide you with a copy of their IRS Determination Letter.
Organizations that do not qualify are: Civic leagues, social or sports clubs, labor unions, chambers of commerce, homeowner’s associations, political groups, groups who lobby for law changes or who operate for personal profit.
Some organizations such as, veteran organizations, fraternal societies, nonprofit cemeteries and certain private non operating foundations are 30% limit organizations, in which case, you may only deduct 30% of your adjusted gross income.
For more information see IRS Publication 526.
4* How Much Of a Deduction You May Take
Generally, you may deduct up to the Fair Market Value of the donated property at the time of the donation. "The Fair Market Value is the price that property would sell for on the open market.
Your total charitable donations for the year must not exceed 50% of your Adjusted Gross Income for that year. If your donation exceeds the 50% limit, you may carry over the excess:
Carryovers
"You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time."
Example: Use table below; (Example A: or Example B:)
You donate a boat that has a fair market value of $90,000. Your adjusted gross income is $30,000. For this year you may take a deduction of $15,000. For each of the next five years you take a deduction of $15,000. Use table below to determine the value of selling versus donating.
You must determine the FMV for a donated boat.
Vessels valued at less than $5000.00
Boats valued less than $5,000.00 do not need an official Survey. Commercial firms and trade organizations publish guides that contain pricing averages for boats. Guides, such as BUC Used Boat Price Guide (http://www.buc.com), are not "official" prices; however, they help you determine your boat’s value. Other online resources, such as http://www.yachtworld.com or http://www.boattraderonline.com, include dealer listings that show what similar boats are selling for. Local classifieds may also be of help.
Vessels valued more than $5,000.00
If the fair market value of your boat is over $5,000 you must have an appraisal (survey) done by a professional marine surveyor to determine your vessel’s value. Request that the marine surveyor complete an appraisal (not a full survey) for the vessel you donate.
In order to qualify, an appraisal must be completed no earlier than 60 days prior to the date of contribution of the appraised property, and must be completed before the due date, including extensions, of the return on which a charitable contribution deduction is first claimed for the donated property.
Appraisal fees
Appraisal fees are paid by the donor and are not deductible. "However, these fees may qualify as a miscellaneous deduction, subject to the 2% limit on Schedule A (Form 1040) if paid to determine the amount allowable as a charitable contribution."
You must keep records to prove the amount of non cash contributions that are made during the year. Record requirements vary based on the amount of your contributions.
5* Determining Fair Market Value (FMV)
Publication 561, Determine The Value Of Property Department of the Treasury, Internal Revenue Service.
- 1. Non-cash Contributions Less Than $250. For any non cash contribution, you must have a receipt from the charitable organization showing the name of the organization, the date and location of the charitable contribution and a reasonably detailed description of the property. An Acknowledgement Letter from the charitable organization containing these three items will serve as a receipt.
- 2. Non-cash Contributions of At Least $250 But Not More than $500. You must have an Acknowledgement Letter containing the information previously stated plus whether you received any goods or services as a result of your contribution. If there were goods or services given in exchange, a good faith estimate of their value should be provided. You must also have this acknowledgement on or before the earlier of: The date you file your return for the year you make the contribution, or the due date including extensions for filing the return. It is recommended to keep the information stated in Additional Records.
- 3. Non-cash Contributions Over $500 But Not Over $5,000. Written acknowledgement as stated in #2, and your records must also include: How you obtained the property, i.e. purchase, gift, etc. and approximate date you obtained the property (or if manufactured for or by you, the approximate date the property was completed).
- 4. Non-cash Donations Over $5,000. (For one property item or a group of similar property items). Written acknowledgement from the charity as stated above and a qualified written appraisal of the property from a qualified appraiser. In the case of a boat, a Marine Surveyor should be hired to complete the appraisal.
Additional Records that you must keep:
- • Address of the organization to which you contributed.
- • The fair market value of the property at the time of the contribution and how you determined the "FMV"
- • If you have a survey, keep a signed copy.
- • Terms and conditions attached to the gift or property.
If your total deduction for all non-cash contributions in one year is more than $500, you must file Section A of IRS form 8283. "Include in Section A only items (or groups of similar items) for which you claimed a deduction of $5,000 or less per item (or groups of similar items)".
6* How To Report Your Deduction
If you claim a deduction of $5,000 or more for an item (or group of similar items), you must file Section B of IRS form 8283. The surveyor and receiving organization should complete and sign their respective parts of Section B and provide the completed form to the donor. Include these forms with your tax return.
When donating a boat you must provide the Title for the vessel, free and clear of any leans to the charity. If you have lost or misplaced the Title, a replacement can be obtained from the state in which you originally titled the vessel.
If you have lost your title and the vessel is titled in Maryland, Virginia, or Washington, DC, the following information may be of assistance:
In Maryland:
Complete an application for loss of title. To do this, go to
http://www.rbff-education.org/cgi-bin/search/rbff.cgi?ID=982275634ad/dnrforms.html. Next, click on "Replacement or Correction for Title/Decals." Print this form, fill it out, and return it to Maryland Department of Natural Resources Licensing and Title Division along with the appropriate fee (specified on the form). It generally takes two weeks for them to process the request.In Virginia:
Complete an application for loss of title. To do this, go to
http://www.rbff-education.org/cgi-bin/search/rbff.cgi?ID=982275634. Next, scroll down to "Boating Forms" and select "Application for Duplicate Certificate of Number, Decal, and/or Title." Print this form. Fill it out and return to the Virginia Department of Game and Inland Fisheries Boat Registration and Titling Section along with the appropriate fee (specified on the form).In Washington, DC:
You must go to the Harbor Patrol in person, located at 550 Water Street SW and show them your driver’s license in order to receive a title replacement form. Washington, DC Harbor Patrol applies a $5.00 fee to replace a lost or destroyed title.
a) Donation Letter
b) Donation Form
c) Donation Receipt
d) Letter and/or form from Survey (if required)
e) IRS Publication f1098c; http://www.irs.gov/pub/irs-pdf/f1098c.pdf
Instructions for Form f1098c; Department of the Treasury, Internal Revenue Service - Current Edition.Charities; http://www.irs.gov/charities/contributors/index.html
Contributions; http://www.irs.gov/charities/article/0,,id=96102,00.html
Publication P526; http://www.irs.gov/pub/irs-pdf/p526.pdf
Search for Charities; http://www.irs.gov/charities/article/0,,id=96136,00.html