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