1. What is Fair Market Value (FMV)?

Fair Market Value (FMV) is the price that property would sell for on the open market between a willing buyer and seller. For vehicle donations, it's used to determine the tax-deductible amount.

2. How Does the Calculator Work?

The calculator uses the average of comparable sales:

Where:

• \( Sale_1, Sale_2, Sale_3 \) — Prices of comparable vehicles sold recently
• Comparable vehicles should be same make, model, year, and similar condition/mileage

Explanation: The average of 3 comparable sales provides a reasonable estimate of what your donated vehicle would sell for in the current market.

3. Importance of FMV for Donations

Details: Accurate FMV calculation is crucial for tax purposes when donating a vehicle. The IRS requires proper documentation of how the value was determined.

4. Using the Calculator

Tips:

• Find 3 recent sales of similar vehicles (same make/model/year)
• Adjust for mileage and condition differences
• Use prices from similar geographic markets
• Document your comparable sales sources

5. Frequently Asked Questions (FAQ)

Q1: Where can I find comparable sales data?
A: Check sources like Kelley Blue Book, Edmunds, local classifieds, and auction results for similar vehicles.

Q2: What if my vehicle needs repairs?
A: Adjust comparable sales prices downward based on estimated repair costs needed to bring your vehicle to similar condition.

Q3: How recent should comparable sales be?
A: Ideally within the last 3 months, as market conditions can change.

Q4: What documentation do I need for taxes?

• Receipt from the charity
• Written acknowledgment if deduction > $500
• Copy of Form 1098-C if deduction > $5,000
• Documentation of your FMV calculation

Q5: Are there special rules for high-value vehicles?
A: For deductions over $5,000, you must get a professional appraisal and attach it to your tax return.