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$8,500. By the time Mr. Sergeant purchased the boat, it had
deteriorated considerably and needed a lot of repairs.
Mr. Sergeant made repairs to the boat and attempted to sell
it for between $60,000 and $82,500; however, he could not sell
it. During this time, Mr. Sergeant carried $25,000 of property
damage insurance policy on the boat.
Mr. Sergeant saw an advertisement in The Wall Street Journal
soliciting boat donations to the Oceanus Institute, Inc., of
Manset, Maine (Oceanus).1 On August 12, 1993, Mr. Sergeant
donated the boat to Oceanus. Twenty days after he donated the
boat, Oceanus sold the boat for $4,000.2
On their 1993 Federal income tax return, petitioners claimed
a gift made to charity, for the boat donation, in the amount of
$75,100. However, they deducted only a portion of this amount
due to limitations on charitable deductions. On their 1994
Federal income tax return, petitioners deducted the charitable
contribution carryover from 1993. Petitioners attached an
appraisal of the boat prepared by Gregory Hurt (the Hurt
appraisal) to their 1993 Federal income tax return.3 Petitioners
based their deduction for the boat on the Hurt appraisal.
1 Oceanus is a charitable organization recognized under
sec. 501(c)(3).
2 It appears that Oceanus damaged the boat prior to this
sale.
3 Mr. Hurt based his appraisal on figures contained in the
BUC Guide, 61st edition.
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Last modified: May 25, 2011