creative but - what would the IRS think? - Posted by Mel

import · August 27, 2003, 9:43am

Posted by Dave Murray, Ohio CPA on August 27, 2003 at 15:01:45:

In my opinion, this wouldn’t stand up to IRS examination. IRS considers a charitable contribution to be the difference between the amount paid and the fair market value. They would argue that the FMV is $13,500. You’d have to prove otherwise, and that might be difficult to do. You could do it and hope the IRS never audits you, but that’s usually not a bet I recommend.

import · August 27, 2003, 9:43am

Posted by Mel on August 27, 2003 at 09:43:54:

We’re purchasing a property from a non-profit organization. To sweeten the deal, they suggested we donate part of the purchase price to get the tax write off.

We wrote up the purchase agreement for $10K + $3,500 donation to be paid at closing. This donation part was written in an addendum to the purchase contract.

Question- if we purchase the property in an IRA, does this cause a problem??? What if we purchase the property outside the IRA? I’ve been thinking about sending the donation NOW so that it is a few weeks before actual closing.

Thanks for any thoughts.