Making Cents: As Mother Said, Honesty Is the Best Policy

If a charity sells a donated item worth more than $50,000 within two years of receiving it, the charity is required to file a report with the IRS. Cars, for example, are usually sold by a charity almost immediately. If the donor deducts more than the cash the charity received in the sale, the IRS may investigate. It is possible that the item fell in value and the donor is justified. However, if the deduction is padded, this process could telegraph cheating ways.