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deterrent devices. See id. Moreover, an improvement funded by an additional
payment to the donee organization from the donor of the qualified vehicle cannot
be a material improvement, regardless of its nature.

(iv) Vehicles Transferred to Needy Individuals

The rule limiting the deduction to the gross proceeds on a donee
organization’s sale without significant use or material improvement does not apply
if the donee sells a qualified vehicle to a needy individual at a price significantly
below fair market value or makes a gift of the vehicle to such an individual in direct
furtherance of a charitable purpose of the donee organization of relieving the poor
and distressed or the underprivileged who are in need of a means of
transportation. See id. section 3.02(3). The charitable purpose must be served by
making vehicles available to the sellers or transferees; it is not sufficient that the
charity uses the proceeds of sales to help needy individuals for charitable purposes.
See id.

(v) Fair Market Value

The fair market value of a qualified vehicle, like that of any other property, is
the price at which the property would change hands between a willing buyer and a
willing seller, neither being under a compulsion to buy or sell and each having
reasonable knowledge of relevant facts. See Treas. Reg. section 1.170A-1(c)(2). An
established used vehicle pricing guide establishes a particular vehicle’s value only if
it lists a sales price for a vehicle that is the same make, model, and year, sold in the
same area, in the same condition, with the same or substantially similar options or
accessories, and with the same or substantially similar warranties or guarantees, as
the vehicle in question. See Notice 2005-44, 2005-25 I.R.B. 1287, section 5. A donor
of a qualified vehicle must obtain a qualified appraisal if his or her deduction is not
limited to the gross proceeds of the donee organization’s sale of the vehicle and is
claimed to exceed $5,000. See id. section 6.

(vi) Acknowledgments

For a gift of a vehicle with a claimed value exceeding $500, the donee
organization’s acknowledgment must include the donor’s name and taxpayer
identification number, the vehicle identification number of the donated vehicle, and
the date of the contribution. See Code section 170(f)(12)(B). If the donee sells the
vehicle without a significant intervening use or material improvement, the
acknowledgment must also certify that the vehicle was sold in an arm’s length

transaction between unrelated parties, indicate the date and gross proceeds of the

WASHINGTON NONPROFIT HANDBOOK -164- 2018