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petitioner claimed a charitable contribution deduction of $55,000
($80,000 fair market value less $25,000 received in the sale).
In the notice of deficiency, respondent determined that, as
of December 31, 1994, the boat had a fair market value of $47,960
and, accordingly, adjusted the capital gains aspect of the
transaction as well as the charitable contribution deduction as
reported by petitioner. Since the $25,000 in cash received by
petitioner in the bargain sale represented 52.127 percent of the
boat's $47,960 value, that percentage applied to petitioner's
cost of $53,500 amounted to a basis of $27,887.94. Since
petitioner received $25,000 in the bargain sale, petitioner
sustained a loss. Respondent, therefore, eliminated the $8,437
long-term capital gain reported by petitioner but did not allow
the loss as a deduction because the loss arose from the sale of a
personal asset. After deducting the $25,000 received by
petitioner from the $47,960 value for the boat, respondent
determined that petitioner's charitable contribution deduction
was $22,960.
Respondent's determination of the $47,960 value was based on
a joint appraisal by respondent's valuation engineer and a
3(...continued)
of $16,563, the amount claimed as basis on petitioner's return.
If, however, petitioner's cost was $53,500, as stipulated by the
parties, the correct amount for the basis on Schedule D should be
$16,719 (rounded).
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Last modified: May 25, 2011