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.

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Karl Denninger ) Internet Consultant & Kids Rights Activist
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