Original Message:
Re: Has anyone ever donated a timeshare for a tax write-off? (by Ken R.):
Quote:From CPA DaveM:There are a few errors and an omission in your post.
First, sales by the developer don't enter into determining the value that an owner should claim when determining how much to deduct for donating a timeshare. That's because the donor must value the donation based on what a willing buyer and seller would agree to as a price in the marketplace that the donor has access to - the resale market. There's an old IRS revenue ruling that makes that clear.
This is a little confusing. Isn't the resort owner, the timeshare owner, and other buyers all considered willing participants? As such, I would think their transactions must all be considered. It is conceivable that the timeshare owner could park across the street, set up a for sale sign, and make his timeshare available for the same price as the resort owner. The resort owner could do nothing to stop that competition. Thus the same market is open to both sellers if they wished to use them.
I'm not discounting or doubting your statement. I do appreciate your comments. I would greatly love to see a copy of the old IRS ruling you speak of. It would help all of us here to be able to see how it applies. If you could find a reference for us, I, for one, would do my best to find and read it.
Quote:Finally, you are correct that there is no $5,000 (or any other) limit on how much one can deduct for donating a timeshare. No one has ever suggested here that there is such a limit. However, what you omitted is that if the claimed deduction exceeds $5,000, the donor must obtain an appraisal of the timeshare performed by a "qualified" appraiser in a manner that meets IRS standards. Otherwise, the donor is not entitled to any deduction.
You are correct. I didn't go into that detail, but it is clear in the instruction publications mentioned in my post. According to the IRS, if a deduction greater than the $5,000 threshold is taken, the taxpayer must be able to produce an appraisal meeting their requirements. It is spelled out clearly how that appraisal is to be done, based on similar sales, based on rental income, or based on replacement costs. A taxpayer can request that the appraiser take into consideration ALL transactions and be within their right to make such a request. There are still other considerations involved in this process the donor must understand.
This goes a lot deeper than most people need at this time. The best advice is to study and read what applies, how it applies, and CYA when you do it.
Again, Thanks for your feedback.
Dr. Ken Rich