The core rule
Boats are qualified vehicles under IRC section 170(f)(12). If the claimed deduction is more than $500, it is generally limited to the gross proceeds from the charity's sale, reported on Form 1098-C, unless an exception applies (significant intervening use, material improvement, or a below-market transfer to a needy individual in furtherance of the charity's purpose).
Forms your client will need
- Form 1098-C from us, generally within 30 days of the sale
- Form 8283 if total noncash contributions exceed $500
- A qualified appraisal only if claiming more than $5,000 under an exception
- Schedule A, since the deduction requires itemizing
Changes starting in 2026
For tax years beginning in 2026, itemized charitable deductions are allowed only to the extent they exceed 0.5% of AGI. The new deduction for non-itemizers applies to cash gifts only, so it does not cover a boat donation.
Common client situations
- A boat sitting unused while carrying costs add up
- Downsizing in retirement
- An estate with a boat to settle
- Year-end planning to bunch deductions above the 2026 floor
Timing and the tax year
The contribution date sets the tax year, but the 1098-C follows the sale. For December donations, clients may need to wait for the form before filing. Plan extensions accordingly.
Business-use boats
Charter and commercial boats may have been depreciated, and the deduction for business property can differ. Review the client's basis and depreciation history before the donation.
Questions
Which tax year does the deduction fall in?
The year of the contribution, even if the boat sells the following year. Clients may need to wait for the 1098-C before filing.
Does the client need to value the boat?
Only if the deduction is $500 or less, or an exception applies. Otherwise the deduction is generally the gross proceeds shown on the 1098-C.
Can you speak with us directly?
Yes, with your client's permission. We can confirm status, timing, and paperwork.
Do you issue a 1098-C for boats sold for $500 or less?
We provide a written acknowledgment. The client can generally deduct fair market value up to $500.
Can the deduction be claimed on a state return?
Many states follow federal itemized deductions, but rules vary.