In-kind Tax Shelter

Hangout GupShup Cafe
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Does anyone in US or Canada heard of it or know someone who has practiced it.

OK, here how it goes (from what I heard of).

Let say, you donate $1000 to a registered charity (involved in this dhanda) and they give you reciept of $5,000 as donation. Behind the curtain, they have purchased software on a 80% discount already that they will donate to organisations/institutions etc in their support programs yada yada. But they can show to government that they bought it on market price.

So let say if a person makes $60K and his tax is deducted with that amount of salary. He donates $2000 to these charitable organisations and gets a $10,000 tax deductable reciept. Now government will minus this amount from $60K and will return the tax on the remaining $10K. It sounds illeagal to me, but some one has asked me to inquire about it and the risk involved.

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Re: In-kind Tax Shelter

it is illegal!

Your fav Guppy or Guppan
3

Re: In-kind Tax Shelter

After 9/11, enron and worldcom corporate fraud, the IRS has been quite dilligent in auditing these federal tax-exempt 501(c)(3) organizations. So, the risk is pretty high.
Yes, it is utterly and completely illegal, and if there is an audit, you and the charity will get nabbed.

You write a check #110 amount of $1000 to Shady Charity R Us. They then deposit the check into their bank account. But they give you receipt back for $2,000 with check number on it. When the IRS crosschecks bank statements with receiptbooks, the disparity will stick out like a fat man at an anorexic anonymous convention.