Category Archives: Tax Planning Strategies

Deducting donated clothes? Document, document, document!

It’s a discussion every tax pro has dozens of times during tax season: “What was the value of your non-cash donations?”

“Gee, Joe, I don’t know–what do you think the value would be?”

As Ron Lieber of The New York Times  discovered when hauling his old clothes to Goodwill, the friendly Goodwill folks won’t help you with this. When Lieber spoke with enrolled agents, who he describes as “hardened members of the corps…who often represent taxpayers in front of Internal Revenue Service auditors” (Thanks, Ron!!), he also learned — as many of my clients have already heard — that documenting what you gave away, and the amount that the thrift shop is able to resell things for, is the key to getting a deduction.

Here are my three keys for getting a deduction that will stand up in audit:

1) Get that receipt the charity gives you, dated and signed by the charity employee.

2) Immediately fill it out, listing your donations. Use a separate piece of paper or spreadsheet if necessary. (Get a sales list from Goodwill, Salvation Army, or comparable charity so you can accurately estimate the resale value of your stuff.)

3) Pictures can be worth a thousand words. I’ve had clients lay their contributions out on the floor in their home and take photos that they save in case the IRS ever wants proof of what was donated. Great strategy.

“The Situation” is in a not-so-good tax situation

Did you know that “Jersey Shore” reality show personality Michael Sorrentino, aka “The Situation”, and his brother Marc, grossed almost $9 million in a variety of ventures over four years? Me neither, until I read the U.S. District Court indictment, reported inThe New York Times,charging the brothers with conspiracy and filing false tax returns. Michael… Continue Reading

How Oregon is helping a billionaire save some bacon on Bacon

There are two current mysteries about Francis Bacon’s Three Studies of Lucien Freud. First, who paid $142.4 million, the most ever paid for a work of art at auction, in November for the triptych? Second, why is it currently being displayed a mere three miles from my home, in the well-regarded-but-let’s-face-it-not-internationally-renowned Portland Art Museum? Can’t… Continue Reading

Apple avoids billions in taxes, and it all looks legal; those guys really are smart

Lawmakers are using words like “gimmicks” and “schemes” to describe how Apple Corporation has used a web of subsidiaries spanning the globe to avoid taxes. There are hearings this week at which Congressmen are expected to say they are shocked, shocked, to hear of tax loopholes being exploited. As The New York Times reported, Congressional… Continue Reading

Sex and the IRS: making “friends” with your IRS auditor, extreme version

Dear IRS: I’ve Read About This In Your Manuals, But I Never Thought It Would Happen To Me… Sometimes I sort through tedious tax court cases looking for some mildly interesting nugget to share, and sometimes a thing of sheer weirdness lands in my lap. An Oregon man has filed a lawsuit claiming that an… Continue Reading

Gay marriage at the Supreme Court: Taxes, as usual, are the key to everything

Edith Windsor saw the federal government claim more than $360,000 in taxes on the assets she inherited from her spouse’s estate when her spouse died in 2009. How could that be, when you are allowed to inherit an unlimited amount from a spouse free of estate tax? Edith’s spouse was a woman. She and Thea… Continue Reading

Morningstar says, “Go west — or east — for college savings plans.”

Morningstar, the mutual fund reviewer and financial advisory firm, has come out with its ratings of Section 529 college savings plans, with top ratings going to plans in Alaska, Utah, Nevada and Maryland. Morningstar’s top-rated plans: Alaska’s T. Rowe Price College Savings Plan (managed by T. Rowe Price Associates, Inc.), Maryland’s College Investment Plan (T.… Continue Reading