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Author Previous Topic: baseball diamond-sized sailboat does 40 knots Topic Next Topic: NBR  

JLC

RO# 18971

Posted - Nov 02 2008 :  09:49:08  Show Profile  Reply with Quote
I hear so different storys on how this works, is it worth it? Or do you take a loss anyway you play it out?

I have heard that the value is spread out over 5 years as a deduction.

My boat is worth (NADA) 28,000.

Thanks for the info.
Has anyone done this?

Homeport: Mystic, Connecticut

pdecat

RO# 842



Posted - Nov 02 2008 :  10:21:33  Show Profile  Reply with Quote
I think the IRS has significantly tightened the valuation regulations. instead of an estimated value they require the actual selling price received by the charitable org. But other than a more accurate determination of value it is subject to the same rules as any charitable deduction.


Bruce



Homeport: Gulf Coast FL Go to Top of Page

joet

RO# 13992

Posted - Nov 02 2008 :  10:24:21  Show Profile  Reply with Quote
The way I understand it is that your boat is worth whatever they can get for it. I don't think they would hold out for top dollar for it and try to turn the boat as quickly as possible.


Homeport: Go to Top of Page

saltysam

RO# 26



Posted - Nov 02 2008 :  10:53:35  Show Profile  Reply with Quote
What would be the tax situation if the boat were one of the features of a raffle ?


Cheers!
Bill

Homeport: New River, Ft Lauderdale Go to Top of Page

cwms

RO# 7357

Posted - Nov 02 2008 :  11:20:57  Show Profile  Reply with Quote
Let's say your boat is worth maybe $2000. OK, you donate it and the charity does a quick sell for $1000. You get a tax write-off of $1000. If you are in the 25% tax bracket, you save $250 on your taxes. I'd rather do a quick sale myself and sell it for $1000 and put that in my pocket.


Homeport: VA Go to Top of Page

JLC

RO# 18971

Posted - Nov 02 2008 :  14:08:34  Show Profile  Reply with Quote
I have an e-mail into my accountant but may have to wait a few days for a grunt from him. I will let you all know what he says, but I'm still very interested in all of your "real time" experiences with this situation.

Thanks for the replies.



Homeport: Mystic, Connecticut Go to Top of Page

Flutterby

RO# 14378

Posted - Nov 02 2008 :  14:52:16  Show Profile  Reply with Quote
I haven't been able to sell my RV and need to get rid of it, so I'll be donating it against my taxes. I'll be watching this topic closely for the IRS rules will probably be the same.


Just think about the mess Obama inherit this time. And it ain't Bush's fault!!!

Homeport: California Sierras/Gold Country Go to Top of Page

Adjuster

RO# 29088

Posted - Nov 02 2008 :  15:32:04  Show Profile  Reply with Quote
I just donated mine to Boat Angel .com Here is how it went down. Filled out some paperwork and took pictures all conveniently supplied by Boat Angel including camera. Boat Angel listed the boat on Ebay and it sold for $900.00. Boat Angel gives a brand new fish finder away with every sold boat. This is the important part as it is considered an improvement to the boat. Per tax/donation laws this 'improvement' allows your donation to be valued at standard Blue Book/NADA prices. My boat NADA is $8500.00 so my taxable donation is $8500.00. However any property donated claimed to be over $5000.00 in value must have an official appraisal. Therefor I reduced my donation amount to $5000.00 to avoid the appraisal hassle. For tax purposes it is approximately 1/3 of your donation that is reduced from your taxes. So my actual tax savings will be about $1500.00. This is all explained on the Boat Angel website and in the paper work they send you. The way Boat Angel works is the boat stays with you until after the closing of the first Ebay auction. If the boat sells during this first auction then the buyer of the boat makes arrangements to pick it up from you at the close of the auction. If the boat doesn't sell at this first auction then Boat Angel makes arrangements to pick up the boat and have it placed in storage until it is sold. Whole process took less than two weeks and I was very satisfied with everything. www.boatangel.com

Just to add, my realistic estimate of the boat value was probably around $3000.00. I had it on Craigslist for several weeks and never received a single call. The day after the donated boat sold on Ebay I got a call from a guy that offered me $2000.00. So I did loose out on that cash.



Edited by - Adjuster on Nov 02 2008 15:40:18

Homeport: Lighthouse Point Go to Top of Page

Flutterby

RO# 14378

Posted - Nov 02 2008 :  16:38:51  Show Profile  Reply with Quote
Great feedback and real world information!

One question Adjuster, if they pick up the boat and put it into storage, do they pay for the storage or do you continue to be financially responsible? I don't mind paying storage while it is listed on Ebay, not until it sells.......

T I A


Just think about the mess Obama inherit this time. And it ain't Bush's fault!!!

Homeport: California Sierras/Gold Country Go to Top of Page

JLC

RO# 18971

Posted - Nov 02 2008 :  17:50:56  Show Profile  Reply with Quote
Thanks Adjuster;

Is this a state by state thing or is the tax / donation arraignment figures nationwide?

Is it my understanding that you get 1/3 of the NADA value of your boat off your taxes?

Seems like it wouldn't be worth it unless I'm not understanding or missing a key part of the whole arraignment.

It seems to me that maybe a survey or inspection might have been worth doing to increase your $$$. I wonder if the survey can be deducted..

TIA !!!!




Homeport: Mystic, Connecticut Go to Top of Page

Flutterby

RO# 14378

Posted - Nov 02 2008 :  18:18:16  Show Profile  Reply with Quote
IRS rules are Federal and most states use the same for deductions.


Just think about the mess Obama inherit this time. And it ain't Bush's fault!!!

Homeport: California Sierras/Gold Country Go to Top of Page

Adjuster

RO# 29088

Posted - Nov 02 2008 :  19:06:42  Show Profile  Reply with Quote
If the boat doesn't sell at its first Ebay listing then Boat Angel will make arrangements to pick up and store the boat and pay for it. If the boat is already in some type of storage then Boat Angel will make the storage payment or pick the boat up which ever is more cost efficient. They even offered to pay my dockage fee here at my condo on the intracoastal if the boat didn't sell right away. Approximately 1/3 of your donated amount is what you will see deducted from your taxes.

Another thing I might add. I don't know if these guys at Boat Angel get some kind of commission or not for signing you up for your donation but from the minute I contacted them till the whole thing was settled they were on me like white on rice. Very frequent courteous phone calls and emails till the deal was done. And they were persistent about making sure that I put the initials of my Boat Angel contact on all correspondence. I believe they must get a commission.



Edited by - Adjuster on Nov 02 2008 19:15:00

Homeport: Lighthouse Point Go to Top of Page

thataway4

RO# 10872

Posted - Nov 02 2008 :  20:04:42  Show Profile  Reply with Quote
I have donated a couple of smaller and less expensive boats to the Boy/Sea Scouts in the past. Once the value was questioned by the IRS and it took me about a year to get it straightened out. Eventually ruled in my favor. A lot depends on your tax bracket. Not sure of the effect on the AMT if you are in that bracket. I would not donate a larger or expensive boat in this economy. Probably better to sell the boat, and make a donation to a charity of your choice.

Bob Austin

Homeport: FL Go to Top of Page

JLC

RO# 18971

Posted - Nov 02 2008 :  20:10:59  Show Profile  Reply with Quote
So bottom line, is it a prudent way to go with a $25,000 boat? or are you get getting rid of something easy and getting something for your troubles?

I can go either way with my boat, keeping it, selling it or using it nest spring. My thoughts were that since I can't sell it, and that I heard that you can get the NADA value spread over 5 years, that I would donate the boat, get 5 grand a year off my taxes for five years.

The minute that arrangement was made I was going to run out and buy another boat in this piss poor economy for like half the price.

A friend at my marina just picked a beautiful one owner 35' Silverton with 400 hours and every option.... original asking price was 32 grand, he walked away with that boat for 14,900.00 with a spotless survey!.



Homeport: Mystic, Connecticut Go to Top of Page

mdoherty

RO# 12220



Posted - Nov 02 2008 :  20:46:24  Show Profile  Reply with Quote
quote:
Originally posted by JLC


I heard that you can get the NADA value spread over 5 years, that I would donate the boat, get 5 grand a year off my taxes for five years.





It's only a deduction not a credit. You have to multiply it by your marginal tax bracket. I think ~35% is the max now.


Mike

Homeport: Edgewater, MD Go to Top of Page

Adjuster

RO# 29088

Posted - Nov 02 2008 :  22:46:07  Show Profile  Reply with Quote
mdoherty is correct. If your boat donation is valued at $25,000.00 you don't get the $25,000.00 removed/deducted from your taxes. Its a percentage thing and it is approximately 1/3. So your tax deduction on the $25,000.00 donation would be approximately $8,300.00. My boat was very inexpensive and costing me more in expenses than what it was worth so the donation was to my benefit. I don't think I would donate a $25,000.00 boat for an $8000.00 tax benefit. But then again donation is supposed to be about giving and the tax write off is just a little bonus.


Homeport: Lighthouse Point Go to Top of Page

JLC

RO# 18971

Posted - Nov 03 2008 :  08:01:22  Show Profile  Reply with Quote
quote:
Originally posted by Adjuster

I don't think I would donate a $25,000.00 boat for an $8000.00 tax benefit. But then again donation is supposed to be about giving and the tax write off is just a little bonus.



Looks like its going to be a Sea Ray Summer 09!!!

Dam ... forced to boat again, all those freakin margarita's, the stuff on the grill, that tight feel of salt on your skin after swimming, that glow on your face from the wind and sun, watching the sunset & tooting your horn at the moment of sunset, Those other 5 boats tied up to you offering you food and booze 24/7, the music, the bikinis that the wives and their friends wear, napping then waking up again for another round, dark cool air at night, the breeze and that awesome bed where you lay down and look around at the inside of your boat until you wake up the next morning.

Dam economy!!

Yes I guess I will have to suffer along side of all of you.

Hard life but someone has to live it.

JLC



Homeport: Mystic, Connecticut Go to Top of Page

pdecat

RO# 842



Posted - Nov 03 2008 :  08:46:35  Show Profile  Reply with Quote
how about this from the horses m outh
http://www.irs.gov/newsroom/article/0,,id=136939,00.html



Bruce



Homeport: Gulf Coast FL Go to Top of Page

Flutterby

RO# 14378

Posted - Nov 03 2008 :  12:59:58  Show Profile  Reply with Quote
Thanks, Bruce! I'll update my knowledge from that link before making any decision to donate.


Just think about the mess Obama inherit this time. And it ain't Bush's fault!!!

Homeport: California Sierras/Gold Country Go to Top of Page

douglee25

RO# 29196

Posted - Nov 03 2008 :  15:59:20  Show Profile  Reply with Quote
JLC,

How about I sell your boat and anything over $12k I get to keep (specs pending)?

What are the specs on your boat?

Doug



Homeport: Philadelphia, PA Go to Top of Page

Adjuster

RO# 29088

Posted - Nov 03 2008 :  16:28:48  Show Profile  Reply with Quote
Thanks pdecat for the IRS document. Here is the important part from that document in regards to the free fish finder Boat Angel gives with every donated boat it sells.

You can generally deduct the vehicle’s fair market value instead of the amount of gross proceeds from the sale if any of the following situations apply:

*
The organization makes significant intervening use of or materially improves the vehicle



Homeport: Lighthouse Point Go to Top of Page

wasjr

RO# 1767

Posted - Nov 04 2008 :  16:30:32  Show Profile  Reply with Quote
I am sorry for the long post but I want to provide another perspective.

JLC, please post what you are told by your CPA. I am a CPA (although I do not actively practice as such currently) and have donated an older pontoon boat to the Boy Scouts. I was able to deduct the NADA value as the Scouts kept the boat and used it at their summer camp and did not sell it.

I am highly suspect of the advice given here on your question. I do not want be an a** and I don’t mean to pick on Adjuster, but I believe strongly that the IRS is not going to allow what Adjuster has done, should he be audited. To summarize, he took a $5,000 tax deduction for a boat that he says is worth $3,000 (although his only offer was for $2,000) and was sold to an independent third party for $900. The theory is that a fish finder is a material or substantial improvement to the boat allowing a deduction of more than the sale price.

You can see from the IRS document linked in the above post that the deduction generally cannot exceed the sale price received by the charity, which in this case is the $900. One exception is if the organization makes material improvements to the boat. Note the explanation from IRS Notice 2005-44: “Material improvement includes a major repair or improvement that improves the condition of the qualified vehicle in a manner that significantly increases the value. Cleaning, minor repairs, and routine maintenance are not considered material improvements. For purposes of section 26 USC 170(f)(12), services that are not considered material improvements include: 1) application of paint or other types of finishes (such as rustproofing or wax); 2) removal of dents and scratches; 3) cleaning or repair of upholstery; and 4) installation of theft deterrent devices.” Given this language, I very strongly doubt the IRS is going to agree that the addition of a fish finder significantly increases the value of the boat.

Also, Adjuster reduced the NADA value to $5,000, even though the only offer he had on the boat was $2,000. From IRS Publication 4303: “Some fundraisers have mistakenly claimed that donors can, in all cases, deduct the full value of their cars as found in a used car guide (such as “blue book” value). A used car guide may be a good starting point to value your car, but you should exercise caution. The IRS will only allow a deduction for the fair market value of the car, which may be substantially less than the “blue book” value.” It is very hard to argue that a sale to an independent third party for $900 is not the fair market value of the boat.

Additionally, there are documentation requirements for the donation to be deductible. Adjuster, you should have received a Form 1098-C from Boat Angel that reported to you, among other things, details of the boat, the date of the sale, the sales proceeds, and a detailed description of the material improvements. Did Boat Angel provide this document? What is shown in Box 5C for the description of material improvements? Note also that Boat Angel is required to report that info to the IRS as well and there is a chance that the IRS computer system will match what has been reported to them by Boat Angel with your return info.

I would suggest that folks follow the Boat Angel link and review the FAQ section of the website, and also the links at the bottom of the IRS link that has been posted. Again, Adjuster I do not want to be an a**, I just believe the advice given is incorrect and that your deduction will be limited to the sales price of $900 if you get audited. I will be interested to see the position of JLC's CPA.


2000 Hurricane Sundeck 217

Homeport: Center Hill Lake, Tennessee Go to Top of Page

JLC

RO# 18971

Posted - Nov 04 2008 :  23:40:27  Show Profile  Reply with Quote
Thanks all for your replies! Interesting thread it turned into and thats a good thing.

Sorry, but I have not heard from my accountant as of yet, he works in Washington during the week and then comes back on weekends.

I think (after hearing all the replies) that being able to write off $5000 a year for 5 years was nothing more than "dockside accounting" by a good intentioned boat yard owner.

I'm not done with this quest yet, I want to be as clear as possible on this subject before deciding on what to do.

Maybe when this is all done and we all know what the bottom line is on donating a boat, this thread my help others in the future.

Thanks again for the feed back, maybe someone who donated anything over 30K will tell their tale on how it went.

JLC



Homeport: Mystic, Connecticut Go to Top of Page

mdoherty

RO# 12220



Posted - Nov 04 2008 :  23:48:38  Show Profile  Reply with Quote
Just to keep the discussion going how does a casualty loss enter into this. I think if the boat is lost due to fire etc. the loss can be claimed (as a deduction not a credit) over the next couple of years.

P.S. I'm fully insured so would not experience a "loss" and can't be accused of doing anything illegal tax wise.


Mike

Edited by - mdoherty on Nov 04 2008 23:50:27

Homeport: Edgewater, MD Go to Top of Page

btoran

RO# 19401

Posted - Nov 08 2008 :  07:28:28  Show Profile  Reply with Quote
quote:
Originally posted by JLC

I can go either way with my boat, keeping it, selling it or using it nest spring. My thoughts were that since I can't sell it,


not sure if you can or can't sell the boat and why.


Bruce Toran
1996 Carver 320 Voyager
-------------------------
"Don't Eat Anything Bigger Than Your Head"


Homeport: Northport, NY Go to Top of Page

Adjuster

RO# 29088

Posted - Nov 09 2008 :  20:13:40  Show Profile  Reply with Quote
I am not a tax guy, accountant or anything of the like. I can only go with what Boat Angel told me and they have given me quite a bit of IRS forms and other paperwork. I will submit it all to my accountant next tax season and see how it goes.


Homeport: Lighthouse Point Go to Top of Page

SMB

RO# 22562

Posted - Nov 09 2008 :  21:47:14  Show Profile  Reply with Quote
I am a practicing CPA with a Masters Degree in taxation. In addition to providing tax servises to individuals and businesses about a third of my practice is consulting with Non-Profit organizations. wasjr is correct.
Adjuster, if you are accurately describing what Boat Angel is telling you then they are advising you to commit tax fraud. These rules were put into place about 4 years ago because there was a great deal of fraud being committed with car donation programs throughout the country. In one study the OMB conducted, less that 2% of claimed deductions actually reached charities.
Under the new rules Boat Angel is required to provide you with a 1098-C describing the donation and indicating the price it sold at. A copy of the 1098-C is filed with the IRS also. By doing that they have fulfilled their obligations. If you claim any other value - you are taking all the risk. Regarding the fishfinder - as described in the IRS notice wasjr provided - that does not rise to the level of "material improvement" the IRS is looking for.
I sincerely doubt that this would hold up under audit and quite possibly could cause an audit, or at least generate a notice denying the deduction.


Steve

Edited by - SMB on Nov 09 2008 21:51:05

Homeport: Brunswick, Maine Go to Top of Page
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