Originally Posted by BruceK
Side issue, it seems odd for the charitable donee/seller to retain ownership for an extended period after lease (?sale). Do they sell on their residual rights as owner to a financier, or do they really retain ownership? I`d have thought they`d be keen to get the boat off their books and get on with something else.
All sorts of games being paid. If the charity sold it for less than "market value" then the deduction allowable to the donee would be the sales price, not market value. So picture this. Mr. Sneaky gets an appraisal of the boat of $500k at the time he donates it. He gets a tax deduction of $500k. However, if charity were to turn right around and sell it for $200k, then his deduction would be reduced to $200k. That would cost Mr. Sneaky about $120k in taxes. I still think the lease is constructively a sale and the deduction very much in question.
There are other games they can play. Various types of trusts. There could be some money going back to Mr. Sneaky although that's more common on land.
Charities often set up schemes but that doesn't mean the IRS always goes along with them. People buy hundreds of dollars of raffle tickets and are told they are tax deductible. They aren't. One year the IRS even looked for all donations divisible by 11 made to a specific church. The raffle tickets were $11 each.