Tax deductible vehicle donations fall under the “Gross Proceeds Limitation” of the IRS tax code in most cases. But I’m going to assume that you have already reviewed my other page on this site found at  car donation tax deduction in which you’ll find information in detail about whether you’ll choose to go forward with obtaining a tax deduction for your car donation at all. Upon reading that article you may determine that your vehicle donation tax write off is limited to great length through the IRS’ specific guidelines, rules and requirements that FMV may not be used in order to determine the amount of tax write off from your car donation. Instead they have clarified that typically the only amount which the charity obtains from selling your car can be applied to your tax deduction.

Exceptions that Allow Use of Fair Market Value (FMV) in Calculating Tax Deduction for Car Donations:

 

• Tax Deduction for Vehicle Donations Exception Number 1: The letter of acknowledgement sent by the charitable organization to you holds a specific statement that shows that they intend to use the vehicle themselves or for a specific purpose other than to simply sell it for proceeds. This would also include detailed information on how the vehicle would be used, the period for which they would use the vehicle, as well as a confirmation that the car won’t be put up for auction or other sale prior to the finishing of the vehicle’s use by the charity or other purpose to which it will be designated. This essentially means that if the charitable organization plans to hold onto the vehicle for internal use, the FMV rule can be used. Although rare, this can be used in some cases.
• Tax Deduction Vehicle Donations Exception  Number 2: The letter of acknowledgement could also contain a statement that certifies the charitable organization intends  to apply a specific material repair or improvement on the car or other vehicle before selling it. In this case a confirmation certification regarding the car would be applied and it wouldn’t be put up for auction or other sale prior to completing the specific material improvement to the car or other vehicle. Once again, this one is rare, but may happen. 
• Tax Deduction Car Donation Exception  Number 3: The most typical exception to the Gross Proceeds Rule of the IRS is one which provides for you to apply the Fair Market Vehicle to your car or other vehicle based on a certification that a needy individual would be sold or gifted the car or other vehicle at an amount below its FMV. In this case the contribution from the charity to the needy individual in one of direct pursuance of the specific charitable purpose which the charity has been adopted for: namely to assist poor, needy, distressed and/or otherwise underprivileged families and individuals would desperately need transportation–in many cases for purposes of employment to get themselves out of poverty.