Re:
> Stan, being uncharacteristically stubborn, writes:
because I cited pretty good reasons to think I'm right :)
> > IRS doc 561:
> > Fair market value (FMV) is the price that
> > property would sell for on the open market.
> >
> > Note that it doesn't say "the price you'd have to pay to replace it".
> > In this case, the answer to the question "what would a dealer pay me for
Wirt says:
> You're misinterpreting the rules. The FMV is what the identical item would
> sell for on the open market, exactly as the rules state. In other words, the
No...do you see the phrase "identical item" in that one line definition
of FMV? I don't.
I do see the word "that", as in "that property". Not similar property,
***THAT*** property. In other words, the item one wants to donate.
Remember, the IRS and your friendly government is basically trying to
find out: how much money-equivalent did you give to the recipient.
*Not* what is the money-equivalent *to the recipient*, but what's the
equivalent in dollars that came out of your pocket.
There are only two ways to determine that value. One is to ask
what would you receive if you sold it. The other is to ask what you'd
pay to replace it. However, the former is generally less than the latter,
so that's what the IRS usually uses. After all, *they don't want to give
you a break*.
> FMV is what the *school* would have to pay for it if it were to go out and
> purchase it itself.
Nope. See above. It's a very simple, very short, single sentence
from the mouth of the IRS: Fair market value (FMV) is the price that
property would sell for on the open market. Not the price it could
be *purchased for*.
When you're dealing with the government, you're well advised to read
things closely ... and then check that you still have your wallet.
> Secondly, you're being too technical and attributing too much concern to the
> IRS. They're not as picky as you're giving them credit. So long as you can
Your rose colored glasses are *really* thick :)
The IRS is much worse than the majority of people give them credit for.
Simple research reveals that.
> Getting three price quotes for your system from three reputable used computer
> dealers and claiming the average of the three as your deduction is a
> perfectly safe and valid procedure.
It completely depends upon a definition of the term: "price quotes for your system"
If you mean "how much would the dealer pay you", then I fully agree...
safe and valid. Perfectly safe? Hey...we're dealing with the IRS here...
*nothing* is perfectly safe :)
If you mean "how much would the dealer charge for such a system",
then I disagree. That's like looking at the advertised prices for
a used car similar to one you're planning to donate. And, yes,
I've been there, done that, consulted with accountants, and *not* used
such retail price estimates on my tax return!
*MANY* people read the tax laws wrong. Many people don't read the tax laws.
Many people read them right and choose to skate on thin ice. All of those
possibilities can lead to problems.
The most common example of the above is "a company car".
The vast majority of people who have "company cars" that I've talked to
are incorrectly deducting much more than they should be ...
leaving possible land mines for a future tax audit.
I'm simply trying to tell Paul: don't make assumptions, particularly
assumptions that benefit you ... ask a professional, and when doing
so make sure you ask about the difference between the price one
might get if one sold the equipment to a dealer (or on eBay) vs.
the replacement price. And even then, rest uneasy in the knowledge
that rarely do tax professionals get all the right answers :)
--
Stan Sieler [log in to unmask]
www.allegro.com/sieler/wanted/index.html www.sieler.com
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