"Karl Denninger" wrote in message
news:hvYfd.44497$bk1.31014@fed1read05...

In article ,
DSK wrote:
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.

?? Maybe to make people rationalize the amount of the deductions
relative to the valuation of the donated boat or car? I think this was
shooting mice with an elephant gun.

Consider Doug the person who buys a sunk hurricane damaged boat for
$20k.

Its trashed, of course.

He manages to get the engines running, and cleans the boat up. He puts
maybe $10k into doing it, because oh, he owns or has available a boat
yard.

He now has a boat that he has $30k into. Of course reality is that its
only
worth $30k, but only if you look real closely. If you don't then you
won't
notice that the wiring is rotting from the inside out (and will cost
$30k to
replace), or that the genset was a take-out with 4,000 hours on it and
while
it runs, it might not for very long. Or that the mains have significant
cylinder damage from the immersion - oh yeah, they run - for now - but
soon
they'll need to be either majored or longblocked.

He "donates" that boat and looking on Yachttrader, finds a similar one
that
is selling for $150,000. So that's his "value" for his tax write-off.

Now if he's in the 39.6% bracket, he realizes a real dollar savings of
about
$60,000. But he has only $30,000 in the boat!

So he just got the government (that'd be you and I) to PAY HIM $30,000
to
"donate" the boat.

The scam unwinds when the charity goes to sell the boat, and the
prospective
buyer determines what was done. He offers to buy the boat for $30,000
(its
real fair market value), and ultimately, the charity capitulates, since
otherwise they get nothing out of it - and $30k is better than nothing,
right?

However, the original fleecing of the public has still taken place - and
it
was all perfectly legal.

This only works for high-tax-bracket individuals, but if you think there
weren't literally HUNDREDS of people thinking of this very angle with
the 'Canes this year before the loophole was closed, you're nuts.

I know people who have, and were, and its a pure rip-off of the public.

Had a friend at the marina with a boat he picked up for about 5k, (been
sitting in a marina yard for 4 years( put 1k into it, used it one season,
shined it up nice and then donated it the following year, after not being
able to sell it for 5k. The survey came in at 17k......even in the 33%
bracket he came out ahead of the game. The guy that bought the boat from
the charity paid 3k for it.



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Activist
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