How To Figure Fair Market Value Out

To recap, the IRS characterizes honest worth as the value an eager purchaser would pay and a ready dealer would acknowledge for the vehicle, when neither one of the partys is constrained to purchase or offer and both sides have sensible information of the applicable actualities. Neither the purchaser nor the vender can be a vehicle merchant. Both must be private gatherings.

Edmunds.com makes it easy to determine your vehicle's fair market value. And, as Midwood says, your assessment has to be "an apples-to-apples comparison."

IRS Publication 4303 explains this in more detail: "If you use a vehicle pricing guide to determine fair market value, be sure that the sales price listed is for a vehicle that is the same make, model and year, sold in the same condition, and with the same or substantially similar options or accessories as your vehicle."

Here's an example: Let's say your car is a 2001 Honda Accord DX sedan (the lowest trim level). It has 350,000 miles and it's in "average" condition. Edmunds estimates it would be worth $1,862 in a private-party sale in Southern California. You can't instead claim the $5,318 private-party value of a Honda Accord EX sedan (a much higher trim level) with 200,000 miles in "clean condition" (a condition grade that's one step up from "average").

source:http://www.edmunds.com/