House Approves New Rules for Noncash Gifts

The U.S. House of Representatives yesterday approved changes in the government rules for donations of cars, intellectual property, and other noncash items. The provisions, included in a piece of corporate-tax legislation (HR 4520), are aimed at preventing individuals and companies from taking overly generous deductions for their noncash donations.

Many charities have expressed concern about the provisions, especially the one involving car donations. The bill would require people who donate a car to obtain an independent appraisal and would limit their tax deduction to that amount. Under current law, donors may deduct the fair market value of a car based on a used-car pricing guide, as long as the car is worth less than $5,000.

Paula Skuratowicz, executive director of the Polly Klaas Foundation, a Petaluma, Calif., charity that helps locate missing children, said if donors have to pay the cost of an appraisal, they would be less likely to donate their vehicles to charity. "It will cause damage to car-donation programs," she said.

Last month, the Senate approved similar -- but not identical -- charity provisions on how donors should value their noncash gifts (The Chronicle, May 27). The two chambers will now have to resolve the differences between the bills.

Ms. Skuratowicz said the Senate car-donation proposal was more problematic than the House version because it would require charities to supply receipts to donors showing how much a donated vehicle sold for and require donors to limit their deductions to the amount of the sale.

"The House bill is a lot better than the Senate bill," said Ms. Skuratowicz. "But it could be a lot better than it is."