Tax Deductions for Donating a Horse to a Nonprofit Group

Donating a horse to a non-profit charitable organization not only financially benefits the donor, but also the recipient establishment and the horse itself. Donation to a reputable facility provides a worthwhile second vocation for an equine, especially one beyond prime exhibition years.

Donating Your Horse for Tax Deduction

Donation to a non-profit organization is often an appealing option for equestrians with mounts full of several healthy years. It is important to note that the donation procedure is not always an expeditious one and an owner should have sufficient cash flow on hand to provide for the horse until the process is complete. A certified public accountant CPA is a reliable source to furnish current year advice, as tax laws change almost annually concerning topics such as required documentation, carryovers and restrictions, if you require assistance.

Determine Fair Market Value

Appraisal is not required for horses valued under $500, but a receipt and credible documentation with a complete description of the horses are needed, along with an account of how the fair market value was calculated for any horse assessed at $250 or higher. For horses of higher value, a professional equine appraiser will cost approximately $200. The appraiser may not have a conflict of interest, such as having a previous affiliation with the non-profit organization as a volunteer or employee. The American Society of Equine Appraisers (ASEA) can assist in locating qualified professional equine appraisers. In determining fair market value, factors such as length of ownership, disciplines in which the horse is trained, demeanor and temperament of the horse may be assessed. The non-profit organization can use this information to determine best use of the horse once possession is transferred.

Subtract for Donation Value

Anything received in exchange for a donated horse must be subtracted from the total value. For example, if an organization offers a gift valued at $500 in exchange for a $2,000 horse, it is considered a barter and the value of the horse donation is reduced to $1,500.

Actual Tax Deduction

The actual tax deduction received depends on the type of non-profit organization to which your horse is gifted. Some charities qualify for up to 50 percent of the donation deduction, while others qualify for much less. A tax professional can provide the most advantageous calculations and alternatives based on the donor’s income tax bracket. If the horse is a business asset or was received as either a gift or inheritance, you may wish to consult a CPA for guidance with any depreciation or inventory adjustments that need to be entered into financial statements.