When you got your horse, you may not have thought about what you would do if you could no longer keep it. Although selling your horse is one option, there is another: donating it to a nonprofit group. You know where it’s going and the care it will receive, and in many cases you can get a tax deduction.
Basic Donation Requirements
To get a deduction, make sure the organization you choose to receive your horse is certified by the Internal Revenue Service as a 501(c)3 organization, which means it’s a nonprofit according to the IRS Code. Be sure you keep a record of the name and address of the charity or organization; the date of the donation; the horse’s description; the fair market value of the horse at the time you donated it and how that value was determined, such as whether you got an appraisal; and the terms of the donation between you and the organization.
Full Deduction Amount
If the 501(c)3 organization you choose uses horses to meet its charitable purpose, you can get a deduction equal to the fair market value of the horse. For example, if you donate the horse to a children’s homeless shelter so the kids can care for it after school, odds are you can’t deduct the full value, since it’s doubtful that the shelter’s charitable purpose has anything to do with horses. Donating to a therapeutic riding center is a better bet, since horses are obviously used to fulfill its charitable purpose.
If horses are not critical to the charity’s purpose, your deduction will be the lesser of the fair market value of the horse or the amount of your basis, which is the amount you paid when you bought it. If your horse’s value has diminished so that it’s worth less now than when you bought it, the charity’s purpose won’t matter. If the reverse is true – for example, if you purchased the horse for $1000 and its fair market value is currently $4000, you need to decide if the higher deduction is worth looking at another charity for the donation.
Keep a description of your horse if its value ranges from $250 to $5000. You also need verification from the charity that you didn’t receive anything in exchange for the donation; if you did, you must get a description of what you received in writing. If your horse was worth more than $5000, you need to file IRS Form 8283 with your taxes, along with an appraisal summary that has been signed by someone with the charity. If your horse was worth $500,000 or more, you need to include the full appraisal with your tax return.
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