· @Daniel Kane
By Daniel Kane, ASA — President & Senior Aircraft Appraiser, Everette Aviation LLC
Donating an aircraft to a university flight program, a museum, or a mission aviation charity can be a generous way to retire an airplane or helicopter. It can also produce one of the largest noncash deductions an owner will ever claim. That combination is exactly why the IRS treats aircraft donations with more scrutiny than almost any other gift of property.
The appraisal sits at the center of that scrutiny. A donor can lose the entire deduction, not just the overstated portion, if the appraisal fails to meet the IRS definition of a qualified appraisal or is prepared by someone who is not a qualified appraiser. This article walks through what the rules require, where donors most often go wrong, and what an appraiser should be addressing in a donation report.
This article is general information from an appraiser’s perspective, not tax or legal advice. Every donor should plan the gift with a CPA or tax attorney before the aircraft changes hands.
Airplanes Are “Qualified Vehicles” — and That Changes the Math
Most owners assume they can deduct whatever their aircraft is worth on the day they hand it over. For airplanes, that is often not the case. Under Internal Revenue Code §170(f)(12), the IRS groups airplanes with cars and boats as “qualified vehicles.” When the claimed value is more than $500, the deduction is generally limited to the gross proceeds the charity receives when it sells the aircraft.
The charity reports that figure to the donor and the IRS on Form 1098-C, and the donor must attach Copy B of that form to the return. No 1098-C, no deduction above $500.
There are two main exceptions that allow a deduction at fair market value instead of sale proceeds:
- Significant intervening use or material improvement. The charity puts the aircraft into regular, substantial use in its exempt mission (a flight school training students in it, a mission organization flying it), or makes material improvements before any sale.
- Transfer to a needy individual. The charity gives or sells the aircraft at a significantly below-market price to a needy individual in furtherance of its charitable purpose. This is rare with aircraft.
The practical lesson: if the charity plans to sell the aircraft quickly, the appraisal does not set the deduction — the sale does. The appraisal matters most when the charity will keep and use the aircraft. Donors should get the charity’s intended use in writing before they commit.
What Makes an Appraisal “Qualified”
When a fair market value deduction is available and the claimed value is over $5,000, the donor needs a qualified appraisal prepared by a qualified appraiser. The requirements come from IRC §170(f)(11) and Treasury Regulation §1.170A-17. A report that looks professional but misses these elements can still be rejected.
A qualified appraisal must, among other things:
- Be prepared in accordance with generally accepted appraisal standards. The regulations treat USPAP as meeting that test.
- Identify the aircraft in enough detail to tie the value to that specific asset: make, model, serial number, registration, total times, engine and propeller or rotor component status, avionics, and condition.
- State the date of contribution, the effective date of value, and that the appraisal was prepared for income tax purposes.
- Define fair market value and explain the method and basis used to reach it.
- Include the appraiser’s name, address, taxpayer identification number, qualifications, and signature.
- Not be based on a fee tied to a percentage of the appraised value.
Who counts as a qualified appraiser
The regulations require an appraiser who has earned a designation from a recognized professional appraisal organization, or who meets specific education and experience requirements for the property type. The appraiser must regularly perform appraisals for compensation and must have verifiable experience with aircraft.
Just as important is who is excluded. The donor, the charity, the party who sold the aircraft to the donor, anyone employed by or related to those parties, and anyone whose relationship would cause a reasonable person to question independence cannot serve. An aircraft broker who will market the airplane for the charity, or a mechanic who maintains it for the donor, is a poor choice even if technically permitted.
A note on helicopters
The qualified vehicle rule in the Code uses the word “airplane.” Whether a helicopter falls under the gross-proceeds limit is not clearly addressed in the statute. Rotorcraft donors should have their tax advisor make that call deliberately, and the appraisal should be built to the full qualified-appraisal standard either way.
Paperwork and Timing: Where Deductions Get Lost
The IRS sorts noncash gifts by claimed value, and each tier adds requirements. For an aircraft deduction claimed at fair market value, the tiers look like this:
| Claimed value | What the donor needs |
|---|---|
| Over $500 | Form 1098-C from the charity (airplanes); Form 8283 Section A or B |
| Over $5,000 | Qualified appraisal; Form 8283 Section B, signed by the appraiser and the charity |
| Over $500,000 | All of the above, plus the full appraisal attached to the tax return |
Timing is where well-intentioned donors trip up. The appraisal’s report date can be no earlier than 60 days before the contribution, and the donor must receive the signed appraisal before the due date of the return, including extensions. An appraisal done a year earlier for insurance or a loan does not qualify, even if the aircraft has not flown since.
The effective date of value must be the date of the contribution. If the aircraft is inspected in March and donated in May, the report must speak to value as of May, and the appraiser should confirm nothing changed in between — no damage, no expired inspections, no component reaching a time limit.
Valuation Issues Unique to Donated Aircraft
Donation appraisals are not simply a market-value report with a tax label. Several issues come up far more often here than in a lender or insurance assignment.
The right market. Fair market value for tax purposes is the price between a willing buyer and willing seller in the market where the property is most commonly sold to the public. For most aircraft that is the retail resale market, not a dealer’s wholesale bid and not a part-out. But a high-time, run-out airframe may genuinely have no retail buyer, and the honest conclusion may be a salvage or parts-based value.
Condition and airworthiness. Many donated aircraft have been sitting. Lapsed annuals, corrosion, expired life-limited parts, and engines past TBO or calendar limits are common. Each one moves value, and the appraiser should document what was physically inspected versus what was taken from records.
Records gaps. Missing logbooks reduce value in any transaction. In a donation they also invite IRS questions about whether the stated times and history can be verified at all.
Non-airworthy and static-display aircraft. Museums often receive aircraft that will never fly again. The appraisal still needs a defensible market — historical and collector sales, comparable static aircraft, or component value — rather than the price the airplane would bring if it were flying.
Fractional or partial interests. Donating a share of an aircraft raises its own valuation questions about marketability and control, and should be scoped carefully before the engagement begins.
Three Things That Shrink the Deduction
Depreciation on business-use aircraft. If the aircraft was used in a business and depreciated — especially with bonus depreciation — the deduction is generally reduced by the amount that would have been ordinary income had the aircraft been sold. For a heavily depreciated business aircraft, the deduction can fall to little more than the remaining tax basis, regardless of what the appraisal says. This is a CPA question, but it should be asked before the donor gets attached to a number.
The 2026 rules for itemizers. Starting with tax year 2026, the One Big Beautiful Bill Act added a floor for itemized charitable deductions: the first 0.5% of adjusted gross income in charitable gifts is not deductible. Donors in the top bracket also see the tax value of itemized deductions capped at 35 cents per dollar rather than 37. Neither change affects how an aircraft is valued, but both affect what the gift is worth to the donor.
Penalties for overvaluation. Claiming a value 150% or more of the correct amount can trigger a 20% accuracy-related penalty on the resulting underpayment; at 200% or more it rises to 40%. Appraisers face their own penalty under IRC §6695A for valuations that produce a substantial misstatement. An inflated appraisal does not help the donor. It transfers risk to them.
A Donor’s Checklist
The donors who come through this process cleanly tend to follow the same order of operations:
- Talk to a CPA first about depreciation history, the qualified vehicle rule, and how the 2026 itemizing rules affect the gift.
- Confirm in writing how the charity will use the aircraft — keep and fly it, display it, or sell it.
- Engage an independent, credentialed appraiser with aircraft-specific experience and no stake in the transaction.
- Schedule the inspection and report so the report date falls within 60 days before the transfer.
- Gather complete logbooks, component cards, AD compliance records, and damage history before the inspection.
- Collect the Form 1098-C and the signed Form 8283 Section B from the charity, and keep the full appraisal with your tax records.
The Bottom Line
An aircraft donation can do real good for an organization and provide a meaningful tax benefit. But the deduction rests on paperwork the IRS reads closely, and the appraisal is the document it reads most closely of all. A defensible, USPAP-compliant report from an independent appraiser who understands both the aircraft and the regulations is the best protection a donor has.
Everette Aviation prepares qualified appraisals for aircraft and helicopter donations nationwide, backed by ASA accreditation and hands-on A&P/IA experience. If you are considering donating an aircraft, call us at +1 561-578-7110 before the transfer date so the timing works in your favor.
Sources
- Form 1098-C limitation on donated cars, boats, and planes
- Charitable Giving After the OBBBA: The 2026 Outlook (Taft)
- Charitable Deduction Unpacked – Individual Itemizers (Thomson Reuters)
- Treasury Regulation §1.170A-17 and IRS Publication 561 (qualified appraisal requirements)