Drewremedy <drewremedy[at]aol.com> wrote:

- quote -

I thought that if the charity sells the property (or
anything else) within two years, your deduction is limited
to the amount it receives (that becoming the FMV), not your
original cost. After all, if you donate appreciated stock
to a charity, which immediately sells it, you don't lose the
deduction for the appreciation.

Seth

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- quote -

Gee I hope I didn't come off as a dishonest person by this
post. My intent isn't to trick anybody. Rather, I know of
land selling at "private sales" (sales not well advertised
to the public) where there aren't alot of buyers willing to
spend $$$ as compared to someone hiring a real estate agent
and showing it off for 2 or 3 months. Because of this you
might be able to save a decent percentage compared to
similar market values of land in the area. The intent
wasn't to commit fraud - I was just trying to understand
what my options would be if I elect to sell the property vs.
donating it. Your information is very much appreciated.
Thank you.

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Todd <bacile99[at]yahoo.com> wrote:

- quote -

Two issues here.

If you have held the property not more than a year at time
of gift then your donation is the lower of FMV at time of
gift or cost basis.

Second, if the charitible organization sells it soon, you
have the same limits as above.

Even worse is if the charitible organization soon sells it
for less than your cost and the appraised value. The sales
price can be taken as a good estimate of the true FMV even
if you have a higher appraisal.

So you need the organization to hold the property certainly
over a year or two, and you need to have held it more than a
year before making the gift.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Todd wrote:

- quote -

If you pay $5,000 for something the fair market value and
tax deduction is $5,000. If you think you can buy properties
for less than the fair market value your estimate of the
fair market value is wrong.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247 EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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- quote -

Essentially your first accountant is not up to par.

If you acquire an asset and hold it for at least one year
you are entitled to deduct the FMV of the asset at the time
of donation to a 501c3.

You must get it properly appraised! Read the rules!

The asset MUST be held for use by the charity in the course
of its operations or otherwise held for XX (two years I
think) by the charity, otherwise the value of your donation
reverts back to the lower of your acquisition price adjusted
for depreciation or FMV--therefor it is essential that you
contract with the charity to HOLD the property for
sufficient time to make the rules work! If the charity turns
around and quickly unloads the lands your donation is
unwrapped!

PS if you think you have a scheme to markup worthless lands
via donations at inflated values keep in mind that the IRS
sent at least one such game player to jail over such games
involving old yachts.

But yes, I can see where if you can bundle up lands that
some bonafide 501c3 holds for some duration such as for
housing development projects then you are inside the tax
rules.

BUT I absolutely would steer clear of schemes where I also
brought a low price buyer or tenant to the table as well.
Some groups will lend their exempt status to such schemes
since they too profit by the mess--but I gather the IRS can
get nasty when folks go to far.

Your scheme has a certain smell about it--you want to be careful!

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Todd wrote:

- quote -

My problem with this is that at the time of sale FMV is the
purchase price. I have successfully argued that point and
had the real estate taxes reduced on the last three houses
that I purchased!

Another problem is that, as an auditor, I would make a point
of auditing large non-cash charitable contributions with a
very suspicious view of the appraisal.

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I have a question about tax implications if I am to donate
vacant land to a charitable organization or church. I have
the ability to purchase land well below the current market
value (some people who are willing to sell their property
ASAP by listing it below market). I was under the
impression that my tax deduction would be based on the fair
market value, not what I paid for the land. I was planning
on purchasing 5 parcels, each with a FMV of about $6000. I
would donate all of them for a total credit of $30,000. The
amount that I pay for this land will be much lower than the
$30,000, but it will appraise for the full 30K. I
understand that such a donation can only account for no more
than 30% of my gross adjusted income in one year. Now, if I
pay $2,000 for land that appraises for $30,000 then donate
it to a church, would I get to deduct the FMV of $30,000 or
the $2,000 that I paid for it?

One more scenario: let's say I purchase the land for $2,000
and hold it for 5 years. After that time, the land has a
FMV of $50,000. If I then were to donate it to a Church,
would I get the tax credit of the FMV amount ($50,000) or
the amount I paid for it ($2,000)? I ask these questions
because I have spoken to two accountants and each had a
different answer. One said that no matter how long you hold
land for and no matter how much it appreciates in value, you
can only deduct the lesser amount: either the purchase price
or the FMV. The other accountant told me to get it
appraised and use the FMV as the deduction amount with no
mention of the purchase price.

What's the deal? Thanks.

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