" Morning;
I have been contacted by someone who has a 1991 E31 850i 6MT that is looking to donate the vehicle for tax purposes to a charity I am associated with.
The vehicle hasn’t run in 9 years and I am interested in what to look for in terms of ‘gotchas’ while inspecting for serviceability. The intent would be to get it roadworthy to auction/sell off for a donation to the charity.
Any information or contact you can hook me up with would be appreciated.
Thanks;"
I provided links to the Buyers Guides here and on the Chapter web site. Any other things I could add would be appreciated. I'm thinking that if it had not run for nearly a decade, it's serviceability would be dependent on how/where its been stored and what condition it was in prior to storage and whether or not there's been any servicing during the 9 years. I asked for the VIN too.
Your thoughts?
-Bob
Since you asked!!
IMHO, the gotcha is: spending money on a 27-28 year old car that has been in storage for 9 years to realize a greater donation/tax write-off is a risky investment!!
After that BaT and Hagerty have valuation info on the 850:
https://bringatrailer.com/bmw/e31-8-series/
FWIW, I would advise that they write-up the best know information and anticipated condition of the car, sell/auction the car as-is, make no attempts to start the engine, repair or run the car and let the new owner sort out the issues, horrors and expense to bring the car back to reliable roadworthy.
Yep, I don't anticipate they will get much for it in as-is condition, unless there is significant upside potential in the as-is condition and at sale/auction that value would be realize risk free!
Since they asked, I anticipate repairs will be done professionally, there isn't much value in a 1991 850 to work with and there is a high probability that the anticipated repair expenses to make it roadworthy/reliable after 9 years in storage, plus other non-operation issues before storage, could more than consume any and all possible donation/write-off value vs the potential value of a less than pristine 1991, 850 at sales/auction.
Also, they only have 2 months to repair and sell, with Nov & Dec being less than ideal months for used car sales, for the 2018 tax year.
My opinion is that a Charity would want a fully functional no problems type of vehicle for an Auction to maximise their return. Person who is going to bid on something like this is looking for more of a "Toy" Also any big gotchas down the road would reflect badly on the charity.
After sitting for 9 years all the rubber is going to be rotten.
This "Barn Find" appeals to a different audience
I agree. Any "professional" repairs will probably end up being more than the value of the car. They won't be shopping around for parts, or using some alternatives as we would, so the OEM cost of things will skyrocket costs. The one nice thing is the 6 speed which is fairly rare for a 91 (unless it was installed after, then you open up a whole other ball of wax). There best bet may be to just auction as is and get the few $K then can.
My Cars - 1991 BMW 850i - mine for fun, 1993 Saab 900c - mine for fun, 2008 Lexus is250 - my daily driver, 2003 Dodge Durango - my wife's, 1994 Acura Legend - gave it to kid
Someone here might want to pick it up as a parts donor, and would probably give more than the tax write-off is going to be worth anyway -- especially with the new standard deductions, there will be fewer people itemizing, and even in the top bracket the deduction is only going to be 37% of whatever the car auctions for. The minimum deduction is $500, so the donor is at least guaranteed that -- but if the deduction claimed is greater than $5000, then you have to get a written appraisal of the car's fair market value. (Basically, it has become a giant PITA to donate a car to charity for tax purposes.) Even at a $4999 sale price, in the top bracket (a married couple earning $600k or more) that's only worth $1850 as a deduction, and someone would probably hand you that much in cash for a parts car. Heck, I might make an offer if I knew the transmission was any good, and others here probably would as well. With two cars using 560G boxes, I wouldn't mind having a spare on the shelf.
Apologies...just felt like doing the math this morning.
Any photos of condition? Even doing all the work yourself and sourcing parts carefully, it's hard to make a buck on an E31. For a non-profit organization to invest in the car before auction is a fool's errand unless they are supremely confident that supporters / bidders are willing to run up an auction purely for the sake of the charity rather than the value of the item being sold. Even then, the FMV provisions probably prevent the donor from getting a very big write-off, because the deduction will be based on the car's value at the time it was donated -- not after repairs were made, etc.
I keep saying that someday I'm going to get around to restoring the E31 sitting in my shop...also a 6MT, but I think a '92. It's supposed to be rainy tomorrow, so maybe I can get an hour to install Hyper's door handle fix that has been sitting in the box for about a year!
Cheers, John
Last edited by dukegrad98; 10-19-2018 at 11:33 AM. Reason: Added tax info
Local charity auctions don't care if it runs or not and the owner will still get a premium tax deduction based on it's similar cars sales value, In other words, Wipe it off send pics and Donate it. Several rare cars go though this not running from my experience. Good savings in purchasing donated vehicles but they seem to be rare with low miles.
pretty sure the tax write off directly coincides with what the charity actually sells it for.
Didn't used to be that way, but too many people got creative with values...
'91 Dinan 860 Stage III (new 6L engine)
'91 Dinan 850 TT stage III (brand new engine) 21st Century Tech meets 18th Century Dinan...
'91 850i 6sp (mint) (sold)
'90 Dinan 750iL TT stage III (Guido - The Beast)
'94 850 CSi The Detroit Auto Show car (restored to factory perfect) (sold)
'96 850Ci, The George Carlin car
''73 3.0 csi, '08 535i, '03 X5 4.6is
...and a few other non BMW cars
This is correct.
At a minimum, you can claim a $500 deduction for pretty much any automobile donation. (Actually, it's a little more technical than that -- but since even the junkyard / scrap metal value of almost any car is probably $500, it is fairly safe to call that amount the floor. If you have a car with a fair market value of $700, but a charity actually sells it for $300, you can still claim a $500 deduction.)
Most charities will provide you with a form 1098-C that shows the actual sales price at auction, and that is the amount you can claim as a deduction. Even if the fair market value is higher than the auction price, you get the amount reported on 1098-C. (The small exception is that $500 example described above. Any 1098-C report above $500 is the maximum deduction you can claim.)
The exception to that rule is if the charity keeps the car for its own use (usually seen with donated vans, pickups, or specialty vehicles like box trucks, etc.), or if the charity sells it to a needy individual at a particularly discounted rate. In those two instances, you can claim the fair market value as a deduction. You then have to calculate FMV on your own, and being too "creative" is at your own peril. I've assisted clients through multi-year IRS audits that focused almost exclusively on their charitable contributions. Even when you have all the supporting documentation, it's an expensive and unpleasant process.
EXECUTIVE SUMMARY: In 98% of cases, a donor can only claim a deduction for the greater of $500 or the actual sale amount which the charity realizes at auction.
To reiterate my point above, the donor in this case probably can't claim FMV because a charity is unlikely to keep an E31 for its own use, and selling an E31 to an already-needy individual at a below-market price would be a pretty cruel joke! The donor will only receive a deduction for $500 or whatever number is reported from the auction sale on a 1098-C. That report could become more complicated if the charity invested in repairing the car prior to sale, but I would make a strong argument that the 1098-C number would have to be adjusted to reflect the amount put into the car between its donation and its auction sale -- as a policy matter, the donor should not benefit from the non-profit's investment in the vehicle.
Man...I haven't done much income tax stuff in a long while -- I spend more time in the estate tax world these days. This topic takes me back.
Cheers, John
Last edited by dukegrad98; 10-22-2018 at 12:08 PM.
Hi Chillax,
I know this post is 30 days old not sure what you chose to do with this vehicle donation. Depending on condition I would be willing to discuss some options to benefit your charity and me to acquire another 850 project car. Let me know if the opportunity is still available to you. You can pm.
Thanks Kish
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