jmsellens@watmath.UUCP (John M Sellens) (03/25/85)
In article <1038@islenet.UUCP> bob@islenet.UUCP (Robert P. Cunningham) writes: >> ( Concerning ksh pricing by AT&T ) > >Perhaps AT&T leadership will once again see the wisdom in helping to >support U.S. higher education, and consider giving software such as ksh >to universities ... and incidentally gaining a $2,000 per-gift tax >deduction. >-- >Bob Cunningham ..{dual,ihnp4,vortex}!islenet!bob I always seem to hear people in the States talking about donatinos in this way. Do they really work this way? For example, suppose AT&T had some software that they offered for sale at $10,000 a pop. But nobody wanted it, because it wasn't particularly good. Does this mean that AT&T could give this useless junk to all the not for profit organizations that it could find and get a whole slew of $10,000 deductions? If so, this would be a handy way to reduce their taxable income to a much smaller amount. This is in effect getting a deduction for giving up the profit that you wouldn't have made anyhow. My understanding of the Canadian tax law on donations (it's been a little while) is that you can only deduct the cost or value of tangible (real) property that you donate. As an example, this would allow you to deduct the direct costs of the software gift (e.g. the tape, incremental duplicating costs, freight, etc.) but not the "value" of the software licence. (Am I right Dave?) Anybody have the straight poop on this? John Sellens {decvax|utzoo|ihnp4|allegra|clyde}!watmath!jmsellens
rb@houxn.UUCP (R.BOTWIN) (03/26/85)
[] Amazing, but true!!!! Subject to a maximum charitable deduction, based upon income, charitable donations of property result in deductions of their "fair market value," not their cost basis to the donor. A typical example is donation of common stock. Buy some stock for $100, watch it go up to $1,000, then decide to sell and pay tax, or give it away and save tax! If sold, you PAY tax on $900 (the profit), if given away you SAVE taxes on $1,000 (the fair market value of the gift).
dave@lsuc.UUCP (David Sherman) (03/26/85)
In article <12145@watmath.UUCP> jmsellens@watmath.UUCP (John M Sellens) writes: ||My understanding of the Canadian tax law on donations (it's been a little ||while) is that you can only deduct the cost or value of tangible (real) ||property that you donate. As an example, this would allow you to deduct ||the direct costs of the software gift (e.g. the tape, incremental ||duplicating costs, freight, etc.) but not the "value" of the software ||licence. (Am I right Dave?) Yep, that sounds right to me. There's nothing specific in the Income Tax Act about it (the wording in s. 110(1)(a) refers simply to "gifts made by the taxpayer ... to ... registered charities"). But I can't see the courts upholding a deduction of the retail price of software where the cost of providing it to the charity is minimal. Dave Sherman The Law Society of Upper Canada Toronto -- {utzoo pesnta nrcaero utcs hcr}!lsuc!dave {allegra decvax ihnp4 linus}!utcsri!lsuc!dave
dgh@sun.uucp (David Hough) (03/27/85)
In article <12145@watmath.UUCP> jmsellens@watmath.UUCP (John M Sellens) writes: >For example, suppose AT&T had some software that they offered for sale at >$10,000 a pop. But nobody wanted it, because it wasn't particularly good. >Does this mean that AT&T could give this useless junk to all the not for >profit organizations that it could find and get a whole slew of $10,000 >deductions? If so, this would be a handy way to reduce their taxable income >to a much smaller amount. This is in effect getting a deduction for giving >up the profit that you wouldn't have made anyhow. People used to inflate the value of their charitable contributions routinely. The law limits the deduction to fair market value, however, and I think that part of the 84 tax increase requires written appraisals for substantial gifts without obvious fair market value, with substantial penalties for inflated deductions, along the lines of those applied to tax shelters. I don't know about corporations, but individuals are limited to a charitable contribution deduction that can not exceed a certain percentage of adjusted gross income --- I don't remember the details. The moral would seem to be to donate software AFTER you realize it's worthless but BEFORE anyone else does. David Hough
jeff@wjvax.UUCP (Jeff Albom) (04/02/85)
.
How do you determine the fair market value on charitable donations
if those donations consist of property ( cars, clothes, Gucci shoe trees,etc.)
If you say the fair market value is one number and the good ole boys down
at your local IRS interrogaton headquarters say prove it, who has the
burden of proof? Any tax court cases on this one?
jeff@wjvax