He opted for the latter.

But instead of trying to sell the car, the retired Milwaukee schoolteacher did what hundreds of thousands of other Americans do each year – he gave it away to charity.

His transaction appears to be one of those rare situations where everyone comes out ahead. Kaczynski avoided the hassle and expense of selling his car, and the charity got to reap its value. In addition, Kaczynski could qualify for a tax deduction.

But the situation is less clear-cut. Not every donor can claim a deduction, and not every charity ends up with a clear gain. Engineering a mutually profitable vehicle donation can be as tricky as driving down a mountain road at night.

To help, the Internal Revenue Service recently issued a publication outlining its rules. Meanwhile, proposals are pending in Congress to tighten how the deductible value of donated vehicles is determined.

According to the law, the deduction is limited to the fair market value of the car, defined as “the price a willing buyer would pay and a willing seller would accept for the car, when neither party is compelled to buy or sell and both parties have reasonable knowledge of the relevant facts,” according to the new IRS Publication 4303, “A Donor’s Guide to Car Donations.”

A fair price “may be substantially less than the “blue book’ value,” the publication continues. “A used car guide may be a good starting point to value your car, but you should exercise caution.”

Checking used car lots and newspaper ads for the prices of vehicles of similar age and mileage aids in determining how much can be deducted. Keeping a record of such research also helps, in case the IRS decides to challenge the deduction.

In addition, a formal written appraisal must be obtained and reported to the IRS for vehicles worth $5,000 or more. The IRS has strict guidelines for appraisers that are outlined in its Publication 561.

In the case of Kaczynski, however, none of this mattered, because of another requirement: To take the deduction, a taxpayer must itemize on his income tax forms.

“I don’t have many deductions,” he said, so he, along with about 65 percent of other taxpayers, takes the standard deduction.

Beyond a possible tax deduction, there is the question of how much money charities actually reap from vehicle donation programs. According to a recent report by the U.S. General Accounting Office, it’s not very much.

“Charities received between zero and 54 percent of the value claimed by donors, with most receiving 5 percent or less,” the report said.

The GAO matched tax returns with information it obtained from charities to get the percentages.

Currently, neither the IRS nor the donor has to be told how much the charity eventually gets when it disposes of the vehicle. Following the GAO report, proposals to mandate such reporting or require appraisals for all donated vehicles have been introduced in Congress.

A big reason charities get less than the fair value reported by taxpayers is that it costs money to dispose of the vehicles.

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For example, Channel 10/36 Friends Inc. has been accepting donated vehicles since December but has nothing to do with processing them, said Art Langlas, auction manager for the organization that supports public television in Milwaukee.

Instead, it has another nonprofit organization, Vehicles for Charity, based in Denver, do so. The cars are put up for auction in Waukegan, Ill., and after expenses, 70 percent of the proceeds go to the Friends and 30 percent to the Coloradans.

As a result, the Friends get an average of $102 for each car donated.

Still, Langlas is not complaining – to him, it is found money. “All we do is just promote it among our members and on the air,” he said. “We don’t have any dollar outlay for doing it.”

If the Friends organization is on one end of the spectrum when it comes to getting value out of donated vehicles, then Esperanza Unida Inc. is at the other. That social service organization in Milwaukee was the beneficiary of Kaczynski’s largess.

Esperanza receives about 2,000 cars a year, half of which are sold to recyclers. The rest are repaired by Esperanza staff and clients and sold on its own lot.

In addition to bringing the organization about $800,000 a year, the program trains clients in automobile repair, with many eventually getting jobs in that field, said Richard Oulahan, director of the organization.

Rawhide Ranch for Boys Inc., New London, Wis., has one of the most extensive and well-known vehicle donation programs in the state, and follows a different path than either the Friends or Esperanza. It receives about 12,000 cars a year, according to David Rivers, vehicle program director. After they are inspected and in some cases rehabilitated, they are auctioned off in a process that raises about $3.5 million a year. Some of boys in the Rawhide program help to evaluate and repair the cars.

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In cars-to-cash transactions, the amount of money that ends up in a charity’s coffers varies widely, so potential donors need to research and think carefully before giving away junkers.

For those who want the charity to get as much as possible, there is a simple strategy. Reb Bortz, a financial planner in Brookfield, Wis., suggests selling the car and donating the proceeds. Assuming that the donor would have reported the fair value of a donated vehicle, the tax deduction is the same.

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(c) 2004, Milwaukee Journal Sentinel.

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AP-NY-08-16-04 0633EDT