Beginning January 1, 2005, new federal tax legislation governing vehicle donations goes into effect. The following is a summary of the newlegislation contained in H.R. 4520.

The American Jobs Creation Act (“2004 Jobs Act”), signed by President Bush on October 22, 2004, enacted new substantiation requirements that apply to deductions for the charitable contribution of qualified vehicles (used automobiles, boats, or airplanes, other than inventory).

The new substantiation rules apply to the donation of vehicles with a claimed value that is greater than $500. For donations of such vehicles, no deduction is allowed unless the taxpayer substantiates the contribution by including an acknowledgement from the donee organization with the tax return on which the deduction is claimed, including the donor's Social Security Number.

In general, the donor's deduction is limited to the gross sales proceeds received from the sale of the vehicle by the donee organization.

The new substantiation requirements are effective for contributions of qualified vehicles made after December 31, 2004.