Tax Guru – Ker$tetter Letter

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Archive for September 13th, 2008

Charlie Rangel vs. Wilbur Mills

Posted by taxguru on September 13, 2008

From a Reader:

Subject: OUPblog and Rangel

Dear Kerry,
 
I am the blog intern at Oxford University Press, and I found your blog very informative and humorous (I love the cartoons!).
 
I noticed that you recently posted about the scandal over Congressman Rangel’s failure to comply with tax law.  Edward A. Zelinsky recently posted on this topic on our site, and I thought that perhaps you’d like to recommend it to your readers.

  http://blog.oup.com/2008/09/rangel_tax/
 
Zelinsky is a Professor of Law and the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America. He discusses Rangel’s situation in light of the achievements of his predecessor, Wilbur Mills.   
 
If I can help you in any other way, please let me know!
 
Best,

 

My Reply:

That is a very interesting comparison of the differences in the Ways & Means Chairmen over the decades.

Even though I wasn’t yet living in Arkansas back in the 1970s, I remember following many of the exploits of Wilbur Mills, both on the tax writing committee, as well as with his friend, Fanne Fox.

I would be glad to post a link to this on my blog.

Thanks for sharing that and feel free to pass along other ideas you have for items I should add to my blog.

Kerry Kerstetter

Here is a short news video covering Rangel’s current problems.

 

 

Posted in Rangel, video | Comments Off on Charlie Rangel vs. Wilbur Mills

Tips on Donating Your Car

Posted by taxguru on September 13, 2008

Here is a short video with Tom Herman of the WSJ discussing the rules for claiming a deduction for a donated vehicle.

After all of these years reading Tom Herman’s columns in the WSJ, this is the first time I have seen what he actually looks like.

Over the years, I have discussed this topic several times and the biggest misconception seems to be with the term Fair Market Value. Even Mr. Herman glosses over this point in this video.

Most people assume that the Kelley Blue Book value is gospel as establishing a vehicle’s value. The truth is that the only true determination of an item’s worth is what it will actually fetch on the open market, as per this definition from all over the web.

The price that an interested but not desperate buyer would be willing to pay and an interested but not desperate seller would be willing to accept on the open market assuming a reasonable period of time for an agreement to arise.

That is why the relatively recent IRS rule requiring people to use the charity’s actual sales price of the vehicle for the charitable deduction makes a lot of sense. That isn’t something you ever see me say very often; IRS doing something that makes sense.

I don’t follow used car prices or track what Kelley Blue Book has been doing in response to the higher fuel prices. However, if they haven’t dropped values of gas hogs to reflect their decreases in the real world, that is no excuse to consider the Blue Book prices as Fair Market Value.

Update:

A day after posting this, I sent the following to a client:

We received your 2007 personal tax organizer and other docs. I’ve
looked them over and the only item that is obviously incomplete has to do with the Jeep you donated to St. Vincent de Paul (SVP).

I see that you wrote $2,000 in the organizer as the value, but that won’t be enough documentation. As the letter from SVP says, you need to have a 1098-C from them showing how much they actually sold the vehicle for if you are going to claim a value of more than $500. I didn’t see a 1098-C among the documents that you sent in. Please contact SVP to obtain a new copy of that form or else we will have to stick with a deduction of just $500.

To help you understand more about this issue, I have attached a copy of the page from The TaxBook, my main tax reference book with the section on vehicle donations circled in red. Please look it over and see how your situation matches up with the examples shown.

Also, just by coincidence, I recently posted an entry on my blog, with a video from the WSJ, on exactly this subject.

Thanks for you help with this. Let me know if you would like to set up a phone appointment to discuss the details of this in more depth.

Kerry

The client wrote back:

I don’t have any such documentation. In that case, I’ll go ahead and claim $500.

Thanks,

TaxCoach Software: Are you giving your clients what they really want?

Posted in Charity, Vehicles, video | Comments Off on Tips on Donating Your Car