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Donations of vehicles continue to rankle the Revenooers.
And it's no surprise, as the year draws to a close, that the IRS has recently seen fit to remind folks that the rules have tightened when it comes to auto giveaways-the American Jobs Creation Act of 2004 limits a donor's deduction of a car to the amount of the gross proceeds from a charity's sale of the clunker.
Having kept their eye on just how this might all be working, a few weeks ago the IRS concluded that "questionable practices" have been developing in the case of some charities which have sold donated vehicles at auction and claimed that the sales were to needy individuals at prices significantly below fair market value. By so doing, charities have tried to deduce that those sorts of sales trigger an exception to the general rule that the deduction allowed to the donor is limited to the proceeds from the sale.
The rules do provide that a donor may be eligible to claim a fair market value deduction if the vehicle is sold at a price significantly below the fair market value to a needy individual, in direct furtherance of a charitable purpose of the recipient organization of relieving the poor and distressed or the underprivileged who are in need of a means of transportation. But the IRS believes this exception doesn't kick in when vehicles are sold at auction-and charities beware, lest ye get your hand slapped by imposition of a penalty or two if you don't dot your I's and cross your T's in reporting to donors.
And not to worry-the IRS office near you may very well not be cutting their wonderful level of telephone "service."
On December 16, the IRS announced that it planned to cut telephone service by reducing the number of hours of availability, daily, from 15 to just 12. This got Congress' attention, however, which slipped some words into a recent defense spending bill to torpedo the IRS' plan.
And just like everything else which seems to be a problem these days, now the alternative minimum tax (AMT) seems to be Bush's fault!
Amidst a recent spate of tax statistics from the IRS cometh their conclusion that the 2001 and 2003 tax cuts reduced individual income tax revenues in 2003, notwithstanding an increase in overall taxable income, and pushed more than 400,000 new taxpayers into AMT!!
"The lower average rates for these higher-income returns not only reflect the decrease in tax rates on ordinary income but also a new preferential tax rate for certain qualified dividends and long-term capital gains...." occasioned by Dubyah's tax reduction measures. There you have it.
Happy New Year.
CONSULT YOUR TAX ADVISOR Ð This article contains general information about various tax matters. Consult your CPA for applicability to your particular situation.
Mr. Quinn is a shareholder of Ashley Quinn, CPAs and Consultants, Ltd., located in Incline Village. He is also a contributor to the recently published ninth edition of Tax Savvy for Small Business, published by Nolo. He may be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.
And it's no surprise, as the year draws to a close, that the IRS has recently seen fit to remind folks that the rules have tightened when it comes to auto giveaways-the American Jobs Creation Act of 2004 limits a donor's deduction of a car to the amount of the gross proceeds from a charity's sale of the clunker.
Having kept their eye on just how this might all be working, a few weeks ago the IRS concluded that "questionable practices" have been developing in the case of some charities which have sold donated vehicles at auction and claimed that the sales were to needy individuals at prices significantly below fair market value. By so doing, charities have tried to deduce that those sorts of sales trigger an exception to the general rule that the deduction allowed to the donor is limited to the proceeds from the sale.
The rules do provide that a donor may be eligible to claim a fair market value deduction if the vehicle is sold at a price significantly below the fair market value to a needy individual, in direct furtherance of a charitable purpose of the recipient organization of relieving the poor and distressed or the underprivileged who are in need of a means of transportation. But the IRS believes this exception doesn't kick in when vehicles are sold at auction-and charities beware, lest ye get your hand slapped by imposition of a penalty or two if you don't dot your I's and cross your T's in reporting to donors.
And not to worry-the IRS office near you may very well not be cutting their wonderful level of telephone "service."
On December 16, the IRS announced that it planned to cut telephone service by reducing the number of hours of availability, daily, from 15 to just 12. This got Congress' attention, however, which slipped some words into a recent defense spending bill to torpedo the IRS' plan.
And just like everything else which seems to be a problem these days, now the alternative minimum tax (AMT) seems to be Bush's fault!
Amidst a recent spate of tax statistics from the IRS cometh their conclusion that the 2001 and 2003 tax cuts reduced individual income tax revenues in 2003, notwithstanding an increase in overall taxable income, and pushed more than 400,000 new taxpayers into AMT!!
"The lower average rates for these higher-income returns not only reflect the decrease in tax rates on ordinary income but also a new preferential tax rate for certain qualified dividends and long-term capital gains...." occasioned by Dubyah's tax reduction measures. There you have it.
Happy New Year.
CONSULT YOUR TAX ADVISOR Ð This article contains general information about various tax matters. Consult your CPA for applicability to your particular situation.
Mr. Quinn is a shareholder of Ashley Quinn, CPAs and Consultants, Ltd., located in Incline Village. He is also a contributor to the recently published ninth edition of Tax Savvy for Small Business, published by Nolo. He may be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.
