'Court Shuts Down Abusive Tax Scheme Involving Donation of Timeshares'

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There's nothing wrong with taking a tax deduction for the fair market value of a timeshare unit donated to a charity (which the charity typically sells & converts to cash).  But there's something very wrong when the value claimed, based on a bogus appraisal, is grossly out-of-whack with the actual subsequent selling price of the unit.

From DOJ press release:  "Tarpey, Donate for a Cause and Timeshare Closings encouraged timeshare owners to donate their unwanted timeshares to Donate for a Cause, a tax-exempt entity organized and operated by Tarpey. The complaint alleges that the customers receive an appraisal that grossly overvalues the donated timeshare rights and customers use that appraisal to claim a large charitable donation deduction, even when the true market value of the timeshare right is a small fraction of the appraised value."

From the complaint: "The IRS reviewed a sample of 1,557 appraisals that defendants prepared for timeshares that were subsequently sold on eBay in 2012. The average appraisal amount for these timeshares was $10,619, yet they only generated an average sales price of $429 when sold on eBay – only 4% of the appraised amount.

In total, defendants sold 5,505 timeshares on eBay which yielded total sale proceeds of $2.2 million. More than 50% of these sales generated $100 or less in sales proceeds, while almost 90% generated less than $1,000 in sales proceeds."

https://www.justice.gov/opa/pr/federal-court-shuts-down-abusive-...
https://www.justice.gov/opa/file/898956/download

P.S.  The promoter here seems to have charged around $3k per transaction for its services.

 

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Wow so that's how those 'we get you out of your time share' works!

I'm glad the IRS is also going after the taxpayers.  They are just as complicit in the fraud.  If you had to GIVE away your timeshare, how on earth could you in good faith believe that you were entitled to a charitable deduction of tens of thousands of dollars?  

dcwilbur said:   I'm glad the IRS is also going after the taxpayers.  They are just as complicit in the fraud.  If you had to GIVE away your timeshare, how on earth could you in good faith believe that you were entitled to a charitable deduction of tens of thousands of dollars?  
  Because some people put $10,000+ down on the Timeshare, so they would think that donating it would give at least the deposit value.

forbin4040 said:   Wow so that's how those 'we get you out of your time share' works!
 So  ARE there any legitimate ways to get rid of a timeshare. These services claim to find loopholes in the contract??

needhelpplease said:   
forbin4040 said:   Wow so that's how those 'we get you out of your time share' works!
 So  ARE there any legitimate ways to get rid of a timeshare. These services claim to find loopholes in the contract??

  
Every timeshare is different.  Some have value and some don't.  Timeshare Users Group TUG is the place for info.  An eBay "completed sales" search is the quickest way to see of there is a market for the particular resort.

AncientMember said:   
needhelpplease said:   
forbin4040 said:   Wow so that's how those 'we get you out of your time share' works!
 So  ARE there any legitimate ways to get rid of a timeshare. These services claim to find loopholes in the contract??

  
Every timeshare is different.  Some have value and some don't.  Timeshare Users Group TUG is the place for info.  An eBay "completed sales" search is the quickest way to see of there is a market for the particular resort.

  
I guess I'm asking about one's that don't  Will search TUG 

Interesting read.  Thanks

dcwilbur said:   I'm glad the IRS is also going after the taxpayers.  They are just as complicit in the fraud.  If you had to GIVE away your timeshare, how on earth could you in good faith believe that you were entitled to a charitable deduction of tens of thousands of dollars?  
  
It you notice the PS the taxpayer is lucky to break even with a 3K payment for services rendered.  So basically Tarpey was using the tax value to offset the cost to the "donator."  

So the donator is going to get double screwed when IRS tags them because the "fee" wasn't itself a "donation" and not likely to be deductible.

RedWolfe01 said:   
dcwilbur said:   I'm glad the IRS is also going after the taxpayers.  They are just as complicit in the fraud.  If you had to GIVE away your timeshare, how on earth could you in good faith believe that you were entitled to a charitable deduction of tens of thousands of dollars?  
  
It you notice the PS the taxpayer is lucky to break even with a 3K payment for services rendered.  So basically Tarpey was using the tax value to offset the cost to the "donator."  

So the donator is going to get double screwed when IRS tags them because the "fee" wasn't itself a "donation" and not likely to be deductible.

  

Ironical, huh?  Trying to screw other taxpayers makes you pay more than you would have paid had you done it honestly.

 

forbin4040 said:   
dcwilbur said:   I'm glad the IRS is also going after the taxpayers.  They are just as complicit in the fraud.  If you had to GIVE away your timeshare, how on earth could you in good faith believe that you were entitled to a charitable deduction of tens of thousands of dollars?  
  Because some people put $10,000+ down on the Timeshare, so they would think that donating it would give at least the deposit value.

  unfortunately businesses can easily write off losses, while private individuals cannot easily write off losses.

Sounds like an idea so harebrained that it might as well have been thought up on FWF.

Crazytree said:   Sounds like an idea so harebrained that it might as well have been thought up on FWF.
  https://www.fatwallet.com/forums/finance/1512374

rufflesinc said:   
Crazytree said:   Sounds like an idea so harebrained that it might as well have been thought up on FWF.
  https://www.fatwallet.com/forums/finance/1512374

  Close! But I don't see buying a bunch of Timeshares and then donating them a smart move.



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