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									                             Pyne, Waltrip, Lippert & Decker,                                     LLP
                                CPAs Litigation Specialists Business Appraisers Consultants
                                         “Where Planning Makes Cent$”



                                              POINTERS
                                              Volume 13 Issue 4            May 2004

                                                                                          Donald W. Pyne, CPA
                                                                                       Catharine F. Waltrip, CPA
                                                                                           Scott M. Decker, CPA
                                                                                         Leatha L. McCoy, CPA


                                                                                             finding of the GAO report mentioned ear-
                                                       CHARITABLE                            lier is that, on average, 4,000-5,000 form
                                                 CONTRIBUTION DEDUCTION                      1040’s are reviewed to see if they have
                                                   RULES MAY CHANGE                          audit potential. Anywhere from thirty to
This spring has been a fun and interesting                                                   forty percent of these returns are then re-
time for me. Our oldest daughter, Blythe,                                                    ferred to the field for audit. Based on the
is a freshman at Camarillo High School         One morning last month, as I came to          GAO’s findings, do you know how many
and is on the track team. Track was my         work and waded through the sea of paper       of these returns were actually audited
sport in high school and college. So just      that was flooding our office, I came across   (hint: throw away any pre-conceived no-
being at a track meet, with the smell of       an article in the Wall Street Journal that    tions of the IRS you already have)? The
fresh cut grass and “heat stuff” (think        caught my attention. I thought that you,      answer: none. That’s right. Not one of
Ben-Gay), brings back a lot of memories.       my faithful readers, might also benefit       them.
Fortunately for Blythe, I was a distance       from this information as well.
runner and she is a high jumper. I say                                                       As a result, the Senate has recently ap-
fortunately because it is so hard for me to    It is estimated that vehicle donation de-     proved an amendment to an international
sit still and watch her run without giving     ductions generate $654 million in tax sav-    tax bill that generally limits car donation
her advice about pacing, handing-off the       ings each year (based on 733,000 tax re-      deductions of more than $500 to the gross
baton or using starting blocks. When she       turns from the year 2000 reporting deduc-     amount that the charity receives upon the
is high jumping, I know there is no advice     tions as a result of vehicle donations).      sale of the vehicle. In the case where the
I can give her that would help. Well, I        The General Accounting Office (“GAO”)         charity decides to keep the vehicle you
guess I can tell her to relax and take her     has issued a report finding that the pro-     donate, the IRS would require appropriate
time, but that’s about it. I can almost re-    ceeds received by charities operating ve-     documentation from you AND the donee
late to those Little League parents when I     hicle donation programs (there are cur-       (the charity to which you gave your car).
arrive at a meet and yell to Blythe on the     rently more than 4,300 U.S. charities with    The bill has yet to leave the floor of the
in-field to ask what height she is jumping.    annual revenue in excess of $100,000 that     Senate, so it (like Cher) will most likely
She always rolls her eyes but gives me the     do so) was significantly less than the de-    go under the knife again.
information anyway. There have been            ductions taxpayers were claiming as de-
two big meets where her 4-by-400 meter         ductions on their tax returns.                Vehicle donations are not the only types
relay team has neglected to check in and/                                                    of non-cash charitable contributions rais-
or show up timely at the starting line, and    Based on the findings of this report,         ing concerns among members of the Fi-
I’m the crazy parent running down the          Washington (the Senate Finance Commit-        nance Committee. The amendment also
stadium stairs screaming “you need to          tee, in particular) is looking for a better   places restrictions on donations of land,
check in!”                                     way to crack down on the amount of unre-      art and intellectual property.
                                               alistically high deductions some individ-
So, with League Finals and CIF Prelims         ual taxpayers are claiming for the dona-      Under the current law, generally, the
fast approaching, I am coaching myself to      tion of that oil-leaking, exhaust billowing   amount allowable for a donation of prop-
sit quietly in the stands and just watch.      eyesore (AKA the “old car”). The panel        erty to a qualified not-for-profit organiza-
Somehow I know that will be a lot harder       also has the IRS in its crosshairs. Another   tion is the fair market value of the item.
to do than it sounds.                                                                        Pursuant to Reg. §1.170A-1(c)(2) “fair
                                                                                             market value” is “the price at which the
                          Cathy Waltrip                                                      property would change hands between a


              1823 Knoll Drive . Ventura . California . 93003     805.650.8310 805.650.6213 fax
                             E-mail: cpa@pwld.com        Website: www.pwld.com
willing buyer and a willing seller, neither
being under compulsion to buy or sell…”                          Internet                            GETTING ORGANIZED
In the case of a car, Rev. Rul. 2002-67                          Hotspots of
instructs us that an established used car                                                      Now that the tax deadline has come and
pricing guide (like the Blue Book) may be                        the Month                     gone, if you’re like me, you’ve vowed to
used if the guide lists the sales price for a                      By Leatha McCoy             get your paperwork better organized for
car that is the same make, model, and                                                          next year! Keeping track of your finances
year, sold in the same area, and in the                                                        helps you to save time and money...
same condition as the donated car.                                                             resources that always seem to be in short
                                                                                               supply these days! Here is a simple sys-
Despite all the bad news, rules and regu-                                                      tem that can help you keep those paper
lations, limitations, stipulations and re-                                                     piles organized.
strictions on the donations of non-cash
items to charities, there are some amazing            http://www.fandango.com
benefits with respect to the donation of
property with a value in excess of the do-       We’ve all seen the funny paper bag peo-
nor’s cost basis afforded the embattled         ple on the movie screen talking about
taxpayer. Please note, however, the fol-        staying out of line by buying your movie
lowing anecdote is not investment advice.       tickets online. Yesterday I checked out        Keep four files for the following informa-
It is an illustration of an unbelievable use    the website for the first time and discov-     tion:
of the Internal Revenue Code – which is         ered it filled with loads of interesting in-
completely legal.                               formation. On Fandango, you have access        1.   The first is a “Permanent” file. This
                                                to movie reviews and trailers, news and             is where you keep your home pur-
                                                gossip, current show times, guaranteed              chase documents, car ownership re-
                                                tickets, and more. By registering at Fan-           cords, insurance information, your
                                                dango, you have access to additional                will and any other permanent record.
                                                benefits, including "My Favorites" theater          A fire safe box is recommended for
                                                personalization, express purchasing, the            this file.
The favorable decision was reached in the       Fandango Newsletter, and information on
case of Herman v. U.S., 73 F. Supp.2d           ticket availability for the most anticipated   2.   The second file is your “To Do” file.
912 (E.D. Tenn. 1999). In this case the         movies of the year. Fandango makes go-              This is for your bills to be paid, in-
taxpayers purchased some used hospital          ing to the movies faster and easier than            surance forms to submit, and other
equipment at a bankruptcy auction for           ever!                                               items needing your current attention
about $40,000. Two years later, they do-                                                            (no more late fees because of mis-
nated the property to a hospital and                       http://www.irs.gov                       placed bills!).
claimed an IRC §170 deduction of
$1,019,864, based on two appraisals of                                                         3.   The third file is your “Paid” file,
the property’s fair market value (roughly                                                           where you store the bills that you
a million dollars more than they paid for                                                           have already paid. The easiest way
                                                Are you still waiting for your refund from
it). In a refund action, the district court                                                         to organize this file is alphabetically
                                                the IRS and want to know where it is?
essentially agreed with the taxpayers,                                                              by company name.
                                                Visit the IRS website at www.irs.gov to
holding that the property had a value of        find out if the IRS received your return,
$1,002,380 at the time of the gift. The                                                        4.   The last file is for “Income Tax In-
                                                and whether your refund was processed               formation”. During the year, put
price paid at the bankruptcy sale was not       and sent to you.
good evidence of the value of the donated                                                           your tax-related documents in this
property, according to the court, since the                                                         file. For example, if you donate
                                                To get your refund status, you’ll need to           clothes to a charity, put the receipt
bankruptcy court was under pressure to          provide the following information as
dispose of the property as quickly as pos-                                                          here. If you sell an investment, put
                                                shown on your return:                               the related information in this file.
sible.
                                                                                                    Remember to include your DMV reg-
                                                •   Your Social Security Number (or                 istration invoices as well as your
This is only one of numerous examples of            IRS Individual Taxpayer Identifica-
providing meaningful benefits to a worthy                                                           W-2’s and mortgage interest paid for
                                                    tion Number).                                   that tax year.
cause, while providing tax benefits to you      •   Your Filing Status.
and your family. Your tax advisor knows         •   The Refund amount (it is important         Staying on top of your paperwork will
of many other ways to help you hold on                                                         help alleviate any panic that may come
                                                    to enter the refund amount exactly as
to YOUR money.                                                                                 with tax filing and save you time and
                                                    it is shown on your return in order for
                                                                                               money to boot!
                                                    their computer system to retrieve
                                 Jeff Dottl         your data).
                                                                                                                            Karen Llata


    The goal of “Pointers” is to provide timely business, financial and tax information. Since space
       limitations require generalizations, we encourage you to obtain specific personal advice
                     before implementing any ideas presented in this publication.

								
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