Federal Legislation Threatens Automotive Hobby - ?!?!?!
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Let's see... No one is going to be required to scrap anything. The financial incentives, if any, are likely to be minimal. And the only vehicles that are going to be scrapped are the ones with no collector value and little likelihood of sharing parts with collector cars. This isn't going to have much impact on collector cars at all.
The fact is, there is already a provision of the current tax code that currently encourages cars to be scrapped. It has had the effect, not of eliminating the collector cars, but rather, of eliminating the car that someone of limited means can buy for say $250. I'm referring to charitable donations. Let's say you have a 1983 Honda Accord sedan, and it has 200,000 miles on it, and maybe it needs some significant repairs, say $1,000 worth. You could sell it to a junkyard and maybe get $50-100 for it. Even if you did the repairs, it wouldn't be worth all that much more than you just paid for the repairs, so you're spending $1,000 to get a car that's worth $1-2K. But the big money is in donating the car. There are lots of organizations such as our local Lung Association that accept cars as donations and offer a big tax deduction. Even though that Accord you're donating might need some repairs, if you donate it to charity, you can deduct the market value of the car. Look it up in NADA and you'll find that at high retail, it's worth $1,875. So if you donate it, you don't have to pay for the repair plus you get a tax deduction of $1,875 which can be worth $525 to $731 to you as a reduction in your taxes. Which is a far better deal than repairing it or junking it.
My mechanic told me that this current provision of our tax laws has had a huge effect of keeping those inexpensive cars from being resold.
The fact is, there is already a provision of the current tax code that currently encourages cars to be scrapped. It has had the effect, not of eliminating the collector cars, but rather, of eliminating the car that someone of limited means can buy for say $250. I'm referring to charitable donations. Let's say you have a 1983 Honda Accord sedan, and it has 200,000 miles on it, and maybe it needs some significant repairs, say $1,000 worth. You could sell it to a junkyard and maybe get $50-100 for it. Even if you did the repairs, it wouldn't be worth all that much more than you just paid for the repairs, so you're spending $1,000 to get a car that's worth $1-2K. But the big money is in donating the car. There are lots of organizations such as our local Lung Association that accept cars as donations and offer a big tax deduction. Even though that Accord you're donating might need some repairs, if you donate it to charity, you can deduct the market value of the car. Look it up in NADA and you'll find that at high retail, it's worth $1,875. So if you donate it, you don't have to pay for the repair plus you get a tax deduction of $1,875 which can be worth $525 to $731 to you as a reduction in your taxes. Which is a far better deal than repairing it or junking it.
My mechanic told me that this current provision of our tax laws has had a huge effect of keeping those inexpensive cars from being resold.
That's REALLY a shame for a few reasons. One is that, many times, the charity repairs the car by having automotive students work on it. The other is that they use the proceeds of the repaired vehicle for the charity. Last is that these cars can be a great deal for people that are struggling.
Leave it to the political action groups to kill something that *actually* helps people in the name of idealism.
Leave it to the political action groups to kill something that *actually* helps people in the name of idealism.
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NSXtacy, the market value (and hence the value of the deduction) for the car you describe would NOT be $1875, but something more like the scrap value of the vehicle, regardless of the NADA book value. And typically, the Kidney Foundation and other similar donees of these vehicles sell them to scrapyards for minimal amounts. In audits, the IRS can and does research what was paid to the donee for the donated vehicle. If the donee received $50 for such a vehicle from a scrapyard, that is the allowable amount of the deduction for the donor.
That's not always the case actually... On my advice, my brother-in-law donated his "finally almost dead" 1979 Toyota Corolla rather than paying a scrap-yard to cart it away.
He donated it to a local Jewish charity which wrote him a receipt for the book value of the car (which was a few hundred dollars at the time) and they towed it away.
From what they said, they had automotive students fix the cars as part of their projects, then auctioned them in a monthly charity auction to people who just needed a set of wheels to get around...
It worked out well. My brother-in-law was able to realize a deduction of a few hundred rather than having to pay $150 to unload the thing, some students gained some knowledge, someone got a revitalized Corolla that probably went another million miles, and the charity made a couple of bucks...
He donated it to a local Jewish charity which wrote him a receipt for the book value of the car (which was a few hundred dollars at the time) and they towed it away.
From what they said, they had automotive students fix the cars as part of their projects, then auctioned them in a monthly charity auction to people who just needed a set of wheels to get around...
It worked out well. My brother-in-law was able to realize a deduction of a few hundred rather than having to pay $150 to unload the thing, some students gained some knowledge, someone got a revitalized Corolla that probably went another million miles, and the charity made a couple of bucks...
I doubt that the proposed legislation will pass. And if it does pass, I doubt that it will have any effect on the number of cars that charities accept in donations. In fact, it may make it more profitable for the charities by subsidizing the cars they get that are in such bad shape that they take them to the junkyard anyway (which is what they do with many of them).
Just when you think politicians have run out of ways of wasting money, they come up with something new and inventive.
Let's say you have a 1983 Honda Accord sedan, and it has 200,000 miles on it, and maybe it needs some significant repairs, say $1,000 worth. You could sell it to a junkyard and maybe get $50-100 for it. Even if you did the repairs, it wouldn't be worth all that much more than you just paid for the repairs, so you're spending $1,000 to get a car that's worth $1-2K.
HOLY CRAPOLA!! My girlfriend owns a 1983 Honda Accord with 200,000 miles!!!! AND its running like crap. It needs a new head which costs just over 1,000 dollars.
Whoa...talk about coincidence...
HOLY CRAPOLA!! My girlfriend owns a 1983 Honda Accord with 200,000 miles!!!! AND its running like crap. It needs a new head which costs just over 1,000 dollars.
Whoa...talk about coincidence...
Really??? That's funny. I actually am facing the same situation but with a 1988 Honda Civic 4WD Wagon (162K miles and a blown head gasket), but I figured it would be easier to illustrate with a car that's somewhat older and somewhat more valuable, so I just picked the Accord since it's such a best-seller.
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