Equine Accounting: Donating a horse to a Charitable Organization

What you need to know about donating a horse to a charitable organization...

2. To deduct charitable contributions of items valued at $500 or more you must complete a Form 8283, Noncash Charitable Contributions, and attached the form to your return. You must also have a written acknowledgement from the organization to substantiate your donation. The acknowledgement must include a description of any property you contributed and whether the organization provided any goods or services in exchange for the gift.
3. For individuals,charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
Ordinarily, you can deduct the fair market value of the horse. An appraisal generally must be obtained if you claim a deduction for a horse valued at more than $5,000. In that case, you must also fill out Section B of Form 8283 and attach the form to your return.
According to Peggy Halpin of Halpin Certified Equine Appraisal Services fair market value is determined based on factors such as disposition, level of training, age, performance ability, soundness, general condition, conformation, sire and dam, ease of sale and eye appeal.
4. If your contribution entitles you to receive merchandise, goods, or services in return - such as admission to a charity event, future lessons/rides on the horse, etc. - you can deduct only the amount that exceeds the fair market value of the benefit received.
5. Only contributions actually made during the tax year are deductible. For example, if you agreed to donate the horse in 2009 but the charity didn't actually take possession until 2010, you make take the deduction only in 2010.
6. What do you look for when choosing an appraiser? Joe Lombard of Corinthian Insurance and Appraisals suggests that you find an appraiser with a combination of certification and experience. Certification is obtained from the American Society of Equine Appraisers. Rates for appraisals can vary between $50 - $150/hour plus expenses.
7. Ask to speak with other people who have already donated to this organization. Ask the donee organization how the horse will be used and for their policy regarding possible future sale of the horse. If the horse is sold within three years of donation, there can be tax repercussions.
For more information see IRS Publication 526 Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property.