Karl Denninger wrote:
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.


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.

And, if one is in a high tax bracket and gets audited (and this kind of
write-off is a BIG red flag), then you not only pay the tax you dodged,
plus a penalty, you could (and should IMHO) land in jail.


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.

Wait a minute, the gov't didn't pay me anything. That was money I earned
every penny of! Isn't that a big part of President George W. Bush Jr's
message?

In any event, it is overkill to rewrite the whole tax code to close a
"loop hole" that was really a matter of improvident enforcement. The
problem is that it is all too easy to "get away with" this kind of
crapola while other people have their assets siezed for ex-spouses back
taxes. The IRS has done a rather poor job... and Congress isn't helping.

Meanwhile, I notice you have nothing to say about the issue of charity's
funding drying up, and the declining boat market in general as an
economic indicator.

DSK

"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.



--
--
Karl Denninger ) Internet Consultant & Kids Rights
Activist
http://www.denninger.net My home on the net - links to everything I do!
http://scubaforum.org Your UNCENSORED place to talk about DIVING!
http://www.spamcuda.net SPAM FREE mailboxes - FREE FOR A LIMITED TIME!
http://genesis3.blogspot.com Musings Of A Sentient Mind

In article ,
P. Fritz wrote:
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.

Exactly.

The law's intent has always been that the donation must be valued at FMV.

That's ALWAYS been the law. The "shortcut" of determining FMV by any means
other than an ACTUAL sale to someone who spends REAL money is and was a
fraud - and its a damn good thing they finally put a stop to it.

--
--
Karl Denninger ) Internet Consultant & Kids Rights Activist
http://www.denninger.net My home on the net - links to everything I do!
http://scubaforum.org Your UNCENSORED place to talk about DIVING!
http://www.spamcuda.net SPAM FREE mailboxes - FREE FOR A LIMITED TIME!
http://genesis3.blogspot.com Musings Of A Sentient Mind

And, if one is in a high tax bracket and gets audited (and this kind of
write-off is a BIG red flag), then you not only pay the tax you dodged,
plus a penalty, you could (and should IMHO) land in jail.


Karl Denninger wrote:
Nope.

So long as he has a C&V survey with that number on it, he sails. Its not
hard to find said C&V survey. How many IRS auditors are surveyors and could
inspect the vessel - two years later after its been resold by the charity?

It basically never happens.

You get audited, but its a correspondance audit. You provide the proof of
value, that's teh end of it.

So if you have every i dotted and every t crossed, you walk?

That doesn't sound like what you were talking about earlier. My
observation is that under the former rules, the charity either had to
keep the boat for at least 1 year or the donor could only write off the
actual sale value less any labor expended by the charity.



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

Wait a minute, the gov't didn't pay me anything. That was money I earned
every penny of! Isn't that a big part of President George W. Bush Jr's
message?


So if you can steal as much of it back as you're able, its ok?

I think not.

So you're in favor of President Bush's huge deficits yet want to make
sure that rich people pay the highest tax possible? You must be a rather
mixed-up individual.



Charities do not have a right to participate in a fraud upon the public
to get their funding. They have been complicit in this scam for a long
time.


If it was legal, where's the fraud?

Oh, the boat market is not declining. You must be smoking something really
funny; show up at some of the shows and see what the exhibitors with the
higher end boats say about their order flow and condition.

Nope, I'm not smoking anything funny. I suggest you look past the happy
faces & publicity hand-outs. Chuck Gould posted some Washington state
statistic on the boat market there recently, did you look?

DSK