Timeshare donation deduction denied by IRS

Many timeshare owners who have been unable to sell their timeshares are lured into "donating" their timeshare to a charity in order to take a charitable deduction on their Income Tax Return (1040). There are many sharks out there just waiting to prey on these innocent folks. See the many listings for timeshare donation on Google and Bing for an idea of who these folks are. A recent Tax Court decison on this issue should be helpful to those thinking of taking this approach to unloading a timeshare.

In Maria Elena Towell v. Commissioner; T.C. Summ. Op. 2010-141; No. 8002-09S (20 Sep 2010), the Tax Court affirmed an IRS denial of a deduction for a gift of a timeshare.

Maria Towell acquired a timeshare in 2001 from Westgate Miami Beach, Limited Ltd. for $12,396. After completing payments on the timeshare in 2004, she deeded the timeshare to an agent for the Tracets Foundation on November 30, 2006. The Tracets Foundation claimed to be a Sec. 501(c)(3) that was involved in lake and stream preservation.

The taxpayer filed Form 8283 and claimed a charitable deduction of $12,900. The IRS audited taxpayer and denied the deduction.

The Tax Court noted that a noncash contribution greater than $5,000 must be supported by filing IRS Form 8283 and a qualified appraisal. A real estate appraisal must be done by an independent appraiser who is appropriately certified. The appraisal must be not earlier than 60 days prior to the gift and must be completed by the due date for the return (including potential extensions). If the appraisal is not completed on time, it may be excused if there is reasonable cause and not willful neglect.

Ms. Towell did not present any evidence of the claimed appraisal to the Court. Because she did not actually obtain an appraisal, the Form 8283 was not valid and the deduction was denied.

Thank you for posting this informative and factual material.

Far too many people incorrectly believe that the "fair market value" of a donated timeshare somehow correlates to what they may have originally paid for it. It doesn't, plain and simple. Many PCC's mislead people with implications (or overt claims) to the contrary.

If a timeshare for which someone paid $15,000 ten years ago can't even be given away for free today, then the fair market value today is clearly ZERO. With a market value of ZERO, it stands to reason that the applicable "deduction" for the "donation" is likewise ZERO.

Thanks again for citing this case. The information may help someone avoid running afoul of the IRS after believing the incorrect claims of PCC's regarding tax deductions for donated timeshares.