Charitable deduction for therapy horse?
Just curious.....This past spring I free leased my older guy to a therapeutic center. Am I eligible for any tax deductions for the use of him? I know if he was donated I would be, but not sure about the free lease. Any clues anyone? Naturally I will also ask my tax guy......Thanks!:wink:
You might be able to swing it
Only because there are no more intelligent replies, I'll mention that a free lease could be compared to a deed of real property in which the transferor/grantor retains a reversion upon occurrence of certain event (time lapse, failure to abide by contract, etc.) and these do occasionally qualify for reduced taxation. It will depend upon your state, the terms of the lease (it should definitely be in writing, and proof of the lessee's charitable/ public policy use may be req'd), whether you itemize, IRS rules re: horses as property, your annual income, etc. So yes, tax preparer should know or find out - just mention to him it could be akin to a conditional alienation of the property/horse. If the lessee is an established non-profit or therapy center they may be able to help, too. It may not be a significant amount, but, again, this depends upon your particular tax circumstances.
I hope that made some sense, but doubt it did.
[this post is accompanied by the usual atty boilerplate - no warranties, I don't represent you, you should seek more competent counsel, etc.]
Best of Luck!
I just went over the pub 17, basically the book the IRS publishes with most of the tax codes and directions.
Based on what I read, I would say no deduction. Every single reference to property donations uses give, no mention of loans or leases. My guess is the IRS would not allow the deduction. Donating the uncollected lease payemts isnt gonna work.
You would have to do it as two separate transactions. Lease the horse for X dollars, receive that money, issue a receipt, then make a cash donation to the organization, with receipts. Of course youd have to report the lease income as income,
Hmm. Oh well, I doubt it is worth it. Thanks tho.
Sorry, the answer is most likely no. This is a summary from page 9 of Pub 526 on the IRS website.
Generally, only a contribution of an entire interest in property to a qualified organization is deductible. When a taxpayer donates the right to use property, he is retaining ownership and control of the property. Because the donation is a contribution of less than the entire interest in that property, it is not deductible.
Example 1: The IRS has held that an individual who donated a week's use of his vacation home to a charity was not entitled to a deduction. Donating the use of a vehicle, permitting rent-free use of an apartment, etc, are also not deductible.
Example 2: Taxpayer owns a 10-story office building and donates rent-free use of the top floor to a charitable organization. Since the taxpayer still owns the building, the taxpayer has contributed a partial interest in property and can't take a deduction for the contribution.
Note: Special rules apply to donations of property transferred to a trust. In certain cases, a deduction for a transfer to a trust of less than the entire interest in the property is allowed. This is only allowed if the interest is (1) a remainder interest transferred to a charitable remainder trust, or a pooled income fund; or (2) an income interest in a charitable lead trust.
However, a couple other things to consider. Did you deliver and pick up this animal? Did you drive out to check on this animal? Then the mileage may be deductible as charitable miles on your personal return. If you have a business though, the miles are probably worth more on the business return. There are other things to consider, but it all depends on the scope of your return.
I am a paid tax preparer, and this is the same answer I would give to anyone who called and asked. Your tax person may have other ideas, but they know your tax situation, I don't.
My tax person has said......no. Oh well. I was really only hoping to take the extra it costs me to have him in this program....like the extra liability insurance I carry.
If they have free lease, use him on thier property, feed, vet etc, dont they have liability insurance that covers the horse ?
Yes, they do, but Hubby and I do not like to rely on anyone elses' coverage. We like our home too much. ;-) It is worth the $500/yr.
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