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his investment in the boat. He consulted with a firm of
certified public accountants (C.P.A.'s), and the C.P.A. firm
advised petitioner that, based on an $80,000 valuation for the
boat, petitioner should receive at least $25,000 in a bargain
sale to IMS, which, combined with the income tax savings from the
charitable contribution deduction, would realize for petitioner
an amount in cash and tax savings that would come reasonably
close to petitioner's investment. IMS, accordingly, agreed to
purchase the boat from petitioner for $25,000. IMS engaged the
services of a boat appraiser (whose $300 fee was paid by
petitioner), and the appraiser prepared a written appraisal
report, dated December 21, 1994, in which he valued the boat at
$80,000. Petitioner sold the boat to IMS on December 30, 1994,
for $25,000. Shortly thereafter, on January 27, 1995, IMS sold
the boat to Waters Edge Marine of Dania, Florida, for $35,000.
Petitioner divided the transaction into two parts on his
1994 Federal income tax return. He reported the bargain sale
aspect of the transaction as the sale of an asset on Schedule D,
Capital Gains and Losses. He reported the selling price received
of $25,000, a basis of $16,563, resulting in a long-term capital
gain of $8,437.3 Then, on Schedule A, Itemized Deductions,
3 Since the $25,000 selling price represented 31.25
percent of the $80,000 value for the boat, that percentage figure
applied to a cost price of $53,000 results in the rounded amount
(continued...)
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