In article ,
Gould 0738 wrote:


The scores of charitable organizations around the country who rely on the
acquisition and resale of donated yachts have been scuttled by a bill passed by
Congress and signed by President Bush. (Disclosure, I used to work for such an
organization).

Under the old law, a donor could deduct the "appraised value" of an asset
donated to charity. The law required vessels to be valued by an independent
marine surveyor, and additionally required that the surveyor be prepared to
defend the valuation using data commonly accepted within the industry. In many
cases, boats were acquired through a mechanism known as a "bargain sale", in
which
the charitable organization could pay for a portion of the boat in cash and the
donor was allowed to take a tax write-off for the difference.

There was, undoubtedly, some abuse of such a system.

Under the new law, the donor cannot deduct anything until the boat is resold by
the charity, and the donor will then be limited to a deduction equal to the
amount the boat brought when sold by the charity.

This same law will now apply to the "donate your car" programs that have become
so popular. Under those programs, donors are typically allowed to deduct the
retail blue book value of a donated vehicle and the charity then runs the cars
through a wholesale auto auction to get whatever they will bring. One veterans
organization in the NE reportedly raised $5mm from donated cars in the last
year.
Kiss 4.9 million of that good-bye.

No longer able to deduct what the asset might have brought, if sold retail,
most donors will be far more reluctant to take a tax deduction based on
whatever number some organization chooses to sell a car, boat, or other asset
for in order to make payroll or rent at the end of the month.

Funny move from an administration that claims it supports philanthropic giving
as an alternative to government social funding and claims it wants to reduce
taxes. This measure makes philanthropic giving far less attractive, not more,
and increases taxes on those who donate assets to charity.

There has been such RAMPANT abuse of this Chuck that it had to stop
SOMEWHERE.

I know of people who have abused this system. It was legal, but smelled
like dead fish.

I for one am glad that this loophole was closed, because there was simply no
way to fix the old way it was being done.

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Karl Denninger ) Internet Consultant & Kids Rights Activist
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