All,

I'm CFO of a small (but powerful) 501 (c) 3, and I think I can speak for
all: give cash!

We do, of course, get in-kind donations of needed supplies (e.g.
breathing gas for diving operations) for which we are extremely grateful
and occasionally donations of supplies or equipment (e.g. old beat up
scuba gear) for which we send out great thanks, but disposing of it is a
pain.

I'm sure museums getting shell collections will tell you the same.

When we receive a non-cash contribution, we prepare and send to the
contributor an IRS 8283 on which: we identify ourselves; state our
status as being eligible to receive tax-deductible non-cash
contributions; and give a description of the items received (usually a
generous and glowing description).

There are varying degrees of detail then needed, at valuations of $500
and at $5,000

The donor must then fill out part of the form detailing what items were
donated, what their condition was, how the items were acquired, at what
cost, and "appraised fair market value". Then the section "declaration
of appraiser" must be signed by an appraiser if over $5,000.

Then the IRS will allow (hopefully) the deduction. As you point out, the
value to the donor is the amount of the contribution times the marginal
tax rate.

For a breathing gas supplier, all this is pretty simple - he has the
invoices showing the retail value, we acknowledge receipt, and his CPA
does the rest. But if anyone offered us a shell collection, we'd
probably refuse it as not worth the hassle.

Mike Gray
CFO, Palm Beach County Reef Rescue
http://www.reef-rescue.org

On 10/28/2010 2:42 PM, Harry G. Lee wrote:
> Dear Bill,
>
> Good question. Let's compare the sale of a collection to vs. its
> charitable donation to an organization which is tax-exempt under the
> provisions of Section 501(c)(3) of the Internal Revenue Code, e.g.,
> the Jacksonville Shell Club, Inc., COA, and most large public museums.
>
> Let's assume a particularly well-curated collection after proper
> appraisal at fair market value (a budget consideration, especially
> for less valuable collections, but I'll nonetheless ignore it for
> simplicity), might bring 50 cents on the dollar - maybe less from a
> dealer and more from another collector.
>
> Let's say the collection, or a defined part of it, is appraised at a
> fair market value of $100,000.00. The collector may thus realize
> $50,000.00 from its sale.
>
> I think the maximum tax deduction derived from the charitable
> donation such as a properly-appraised shell collection is 30% of the
> donor's (annual) taxable income. At
> <http://www.money-zine.com/Financial-Planning/Tax-Shelter/Federal-Income-Tax-Rates/>,
>
> the tax table indicates the 35% incremental tax rate (maximum it
> seems) kicks in at a taxable income of $373,650, which amount is
> taxed at $105,095.00. It seems to me that the donor would have to
> report a taxable income somewhat in excess of $450.000 to realize a
> tax savings of $50,000.00.
>
> I think it is safe to say that the notion of profiting from a
> charitable donation of this sort can be dismissed for all practical
> purposes. Further, for the average collector, any pecuniary benefit
> from donation/ tax deduction has to be rather trivial vs. the profits
> from sale of his trophies. As Charley wrote, "most donors [to the
> Carnegie Museum] did not take a tax write-off."
>
> Now, (1) I am no CPA, essentially shooting from the hip here, and I
> welcome a refutation of any part of the preceding construct. (2) I
> have not weighed consideration of altruism, scientific integrity,
> etc. in this presentation; this is a strictly economic analysis.
>
> Harry
>
>
> At 01:22 PM 10/28/2010, you wrote:
>> How easy is it to take a tax deduction so you are able to withstand an
>> audit?  I have heard that in order to do it you need to:
>>
>>    - learn what credentials are needed for an appraiser (not
>> standard, no
>> "directory of appraisers", etc.),
>>    - find an appraiser willing to appraise the collection (many are busy
>> and do not "enjoy" appraisal work),
>>    - pay the appraiser (fee can consume the value of the collection),
>>    - then fill out the tax forms needed to claim the deduction (Which
>> ones?
>> Any guidance available?).
>>
>> Has anyone actually gone through the process to obtain a tax
>> write-off for
>> the sale of a collection?  Was it worth the cost in time and money?
>>
>> When this topic comes up, we tend to hear from the people who want the
>> collection (e.g. museums, other advanced collectors, dealers, COA
>> convention
>> auction chairperson, etc.) who present the topic from their perspective.
>> What is the perspective of someone with a collection needing to make a
>> decision?  If you want the best financial return for the collection,
>> how do
>> you proceed and why?
>>
>> Bill Fenzan
>> Norfolk, VA
>>
>> ----- Original Message -----
>> From: "Charles Sturm" <[log in to unmask]>
>> To: <[log in to unmask]>
>> Sent: Thursday, October 28, 2010 9:17 AM
>> Subject: Re: [CONCH-L] Disposing of collections
>>
>>
>>> They can also consider donating them to a museum. Most museums do
>>> not have
>>> the funds to purchase collections, however, the donor can deduct the
>>> value
>>> on their tax returns.
>>>
>>> I have helped incorporate several collections into the Carnegie
>>> Museum's
>>> collection. All were donated, most donors did not take a tax write off.
>>> The donors just wanted to know that the collection would be cared
>>> for and
>>> that it would be used by others.
>>
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