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William Perez

Donating Your House to the Fire Department for Training

By July 27, 2010

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Can a person obtain a tax deduction for donating his house to a local fire department that will burn the house down as part of a training exercise? In a recent court case (summarized by the Tax Professor Paul Caron), the Court did not decide on this issue of whether the taxpayers were eligible for a charitable deduction. Rather, the Court ruled that the taxpayer failed to supply the required documents to substantiate the value of his donation.

When donating property to charity, the tax laws require that you provide proof of the value of the donated property. For property worth more $5,000, taxpayers also must provide a written appraisal and the charity must acknowledge receipt of the donated property. Apparently the taxpayer in court case omitted those crucial documents.

Joe Kristan, writing over at Roth CPA Tax Update, states "the issue is not settled" over whether donating a house to a fire department would be tax deductible, but rather that "the taxpayer blew any chance at a deduction by failing to properly document the donation on their tax return."

The bottom line: documenting charitable donations, especially large donations, is a necessary step to preventing the IRS from disallowing those deductions.

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