Reply
 
Thread Tools Display Modes
 
Old 11-09-2015, 10:40 AM   #21
Guru
 
hfoster's Avatar
 
City: Cleveland
Country: USA
Join Date: Mar 2012
Posts: 515
Quote:
Originally Posted by Art View Post
H - Irish is as Irish does!

That is why we have the luck Art.

I am astonished that you did not give Herderings that wonderful quote Art.

Cheers and happy cruising to you and yours mate.

And best of luck to you Herdering.

H. Foster
__________________
Advertisement

hfoster is offline   Reply With Quote
Old 11-09-2015, 10:49 AM   #22
Guru
 
City: Satsuma FL
Country: United States
Vessel Name: No Mo Trawla
Vessel Model: Hurricane SS188
Join Date: Jul 2014
Posts: 1,681
Not an attorney here but it seems to me there is no need for you to charter unless you have doubts about the boat. The IRS issues should be between the donor and the non-profit. If you are doing the 3 year charter to help out the donor in getting the big write off, well that is up to you.
__________________

Donsan is offline   Reply With Quote
Old 11-09-2015, 10:15 PM   #23
Veteran Member
 
City: Western MD
Country: USA
Join Date: Feb 2015
Posts: 32
The "as-is/where-is" meant that they would not bicker nor lower the price should a survey find anything wrong. If there were big things wrong I could always back out... but again, after the cost of said survey. Guess they are confident. I would surely do a good survey.

NOW... very interesting... there is a non-profit who handles boat donations for non-profits! (And would handle this.) Maritime Funding Association of Maine & Block Island Maritime Funding - Boat Donations
Herderings is offline   Reply With Quote
Old 11-10-2015, 12:16 AM   #24
Guru
 
TDunn's Avatar
 
City: Maine Coast
Country: USA
Vessel Name: Tortuga
Vessel Model: Nunes Brothers Raised Deck Cruiser
Join Date: Feb 2015
Posts: 672
Reading the tax publications on charitable donations will make this clear. Basically it come down to this.

1. If a boat is donated to a charity and then sold the deduction is limited to the actual procedes of the sale. The deductioncan't be claimed until the boat sells.

2. If the boat is donated to a charity and the charity makes substantial use of the boat as part of its normal operations and then sells the boat after that use, the deduction is the fair market value of the boat at the time of the donation and can be taken for the tax year of the donation.

Basically #2 is the case you are looking at. When the charity charters the boat to you they are arguing that that constitutes substantial use of the boat so the donator gets the higher deduction. If the charity you are dealing with charters boats as part of its normal operations (even if those charters are part of sales of donated boats), you are likely safe. I didn't read the details, but I think the three years is part of the definition of substantial use. Actually you are safe in most cases. the only loser is the person who donated the boat who might get a lower deduction if they are audited and the IRS finds that the chartering of the boat to you does not constitute substantial use in the normal business of the charity.

Just my reading of the tax pubs. I looked into this a few years ago when I was interested in buying a boat in the same situation. I decided not to go through with it.
TDunn is offline   Reply With Quote
Old 11-10-2015, 04:14 AM   #25
THD
Guru
 
City: Seattle
Country: US
Join Date: Apr 2012
Posts: 1,142
Heredering-as a tax attorney, I cant give you advice, but can clarify. TDunn has it basically correct. This may be more ifo than you want or really need, but here goes: The only IRS issue in the value of the boat to be deducted by the donor on his tax return. You are not a party to that transaction and there are o legal issues that involve you. If the value is found to be wrong, the donor loses the deduction and, if the valuation was fraudulent, the charitable organization can be hit with a penalty. As TDunn noted, the Internal Revenue Code and Regs define the value of the donation as the lesser of FMV at the time of the donation, or the price at which the charity sells the property, if sold "with no intervening use or improvements to the donated property by the donee". So, if they sell to you having not used the boat in any way themselves, the donor's charitable deduction is the price you paid. That is what they are trying to avoid. They need to show an intervening use by the charitable organization before selling to you. Two interesting points-(1) for a boat, beyond a small boat, the charitable org is required to have the value of the boat supported by a survery or formal appraisal So, they should have this and could make it available to you. (2) The charitable org has to give the donor a statement that is will use the boat, the duration of the use, the description of the use, and certify that the boat will not be sold during that period. Thus the charter. Since there is no stated period in the Code or Regs the 3 year charter is something I suspect their tax attorney has told them will be safe in almost every circumstance. You haven't mentioned how the charter works. Do you agree on a sale price up front. And then is the charter fee the sales price divided by the 36 months? With perhaps some interest component thrown in? Or, do you truly charter and then purchase for some stated value at the end of the charter? I presume if you walk during the charter period, you simply lose whatever you have paid for the charter. If you are really interested, you may have some negotiating room on the term of the charter, i.e. 12 months, 18 months or 24 months.

All that said, although you have only described the boat as 32', I am assuming a somewhat older boat, certainly not one in the multiple $100K range. If that is the case, I cant imagine that the difference between the donor's value and your purchase price can really be all that much. If you want the boat, my inclination would be to simply tell the funding outfit that you will buy the boat at your price and if the donor wants to get rid of it, he will have to accept that as his charitable deduction. The reason whoulf be pretty straightforward, you want complete ownership now to be able to do what you want with the boat. If they won't agree, walk.
THD is offline   Reply With Quote
Old 11-10-2015, 06:37 AM   #26
Guru
 
twistedtree's Avatar
 
City: Gloucester, MA
Country: USA
Join Date: Jan 2013
Posts: 3,205
What should be clear to everyone now is that the NPO will continue to own the boat for the 3 years and the OP will charter it, then buy at the end. So basically a charter agreement with a buyout at the end, or a lease-to-buy arrangement.

There might be simple solutions to the concerns raise by simply structuring the charter agreement accordingly. For example, if you want to be able to get out of the deal over the course of the agreement, negotiate to make it cancellable by you with some notice, or on annual boundaries. If you cancel, you will lose your charter payments made up to the cancellation point, which would otherwise have been payments towards the purchase. So you lose some and the NPO gains some, but you get out of the boat and the NPO has to go find another buyer. If you can get such an arrangement, I actually think it has some real advantages. Who wouldn't want to buy a boat on a try-and-buy basis, or with a return policy which is basically what you would be getting.
__________________
www.MVTanglewood.com
twistedtree is online now   Reply With Quote
Old 11-10-2015, 06:59 AM   #27
Guru
 
ranger42c's Avatar
 
City: Maryland
Country: USA
Vessel Model: 42' Sportfish
Join Date: Aug 2013
Posts: 3,159
Quote:
Originally Posted by Herderings View Post
The owner (through the broker) wants to donate the boat to a non-profit at a much higher valued amount than the price the non-profit would agree to sell it to me for. Owner gets a big tax write off, non-prof. get a chunk and I get a good price.

Quote:
Originally Posted by THD View Post
The only IRS issue in the value of the boat to be deducted by the donor on his tax return. You are not a party to that transaction and there are o legal issues that involve you.

Linda, you are only party to a transaction between the "owner" -- no matter whether it's the current owner in a straightforward sale direct to you, or the "charity" if it's been donated to them in the meantime.

I don't see any reason why you should care at all about the current owner's/donor's tax issues.

The boat is worth to you what it's worth to you. Pay that much, no more, and take immediate ownership.

Get on with enjoying boating.

-Chris
__________________
South River, Chesapeake Bay
ranger42c is offline   Reply With Quote
Old 11-10-2015, 08:17 AM   #28
Art
Guru
 
Art's Avatar
 
City: SF Bay Area
Country: USA
Vessel Model: Tollycraft 34' Tri Cabin
Join Date: Feb 2011
Posts: 7,986
Whole thing sounds like a can o' worms. That's the reason I walked on similar situation years ago. Soooo... Unless the boat cost would come out exceptionally low in comparison to its currently presumed exceptionally good condition - I'd walk quickly away. There are plenty of good boats at good prices available on the market without having to go through these shenanigans; and, possible catastrophe - legal or otherwise. Don't forget it's winter and many boat owners are ready to dicker - If you know how to get to a best price.
Art is offline   Reply With Quote
Old 11-10-2015, 03:05 PM   #29
Veteran Member
 
City: Western MD
Country: USA
Join Date: Feb 2015
Posts: 32
Thanks everyone. I am waiting for their contract to be sent this afternoon which will, of course, explain much more. Meanwhile, I'll detail a little more of what I know for those interested. First of all, the NPO who's mission it is to handle boat donations for other maritime NPOs handles all of this--quite experience. They are flexible on the contract, and usually it is as described above--a lease to purchase type agreement. In my case, they will accept a much lower than-the-value price for two reasons: 1) I will pay cash up front, vs them financing (they hold the title and they are listed as insured on my policy; and 2) They do not have to move the boat from Annapolis to Rhode Island, fix it, slip it, etc etc. In fact, they won't even have to survey it for my survey will do.

This came about this way for the owner originally put it on the market with a broker... then found 1) he could be a philanthroper (sp); 2) he could be rid of it fast by donating; and 3) a NPO would actually take it on with a buyer (charterer) in place.

We are talking a $60 to $80k survey value for a (cash) price of $35 -- listing price ("for quick sale") was $49k.

I would be sort of stupid not to do it. I cannot sell it for three years--but this is okay. One of my other hesitations is that it is smaller than I would like for "condo slip living." But I decided the good deal, and likely easy to sell when I can/want to (as it is unique to the market & good rep) would make up for the living space difference.

Of course--all based on the survey. I plan to negotiate an end to the "as is/where is" no bickering on the price stipulation because my original offer was $30k--the donation co said $35k bottom line.
Herderings is offline   Reply With Quote
Old 11-11-2015, 07:22 AM   #30
FF
Guru
 
FF's Avatar
 
Join Date: Oct 2007
Posts: 16,534
"We are talking a $60 to $80k survey value for a (cash) price of $35 -- listing price ("for quick sale") was $49k."

The price of any boat is what it would sell for . "Survey value" is pure BS.

Depending on make and condition $35K might be spot on.

Paint (condition) sells da boat .Not bogus dream values.
FF is offline   Reply With Quote
Old 11-11-2015, 08:32 AM   #31
Senior Member
 
City: Edmonds
Country: USA
Join Date: Apr 2013
Posts: 176
What FF said. A 1987 32-foot boat worth $60-80K? A boat is worth what a buyer will pay for it. Period. If you are looking to live aboard I think you will find anything under 40 feet will cramp your style. I am making tons of assumptions. Good luck with your decisions! 😎
Robster_in_edmonds is offline   Reply With Quote
Old 11-11-2015, 11:16 AM   #32
Veteran Member
 
City: Western MD
Country: USA
Join Date: Feb 2015
Posts: 32
Yes, I understand. There are four of the same boats on the market that are two feet smaller (30s)--of similar age. Two listed in the mid 50k range and two in the mid 70s. He "added value" to this boat for it has $150k of upgrades. I am feeling that I am making myself buy this boat because of the upgrades & value-- but it really would be uncomfy that small. I suppose it seems a secret what boat it is... I hesitated to put that on here because the yachtworld listing is wrong--the owner told the broker it was a 30', so the broker copied all 30foot info. It is a 32" with a 135 perkins, & other "clarifications" I found onboard with all the papers (title, etc.) Sundowner Tug... 32' in annapolis... not many made nor on the market. sundowner Boats For Sale
Herderings is offline   Reply With Quote
Old 11-11-2015, 11:23 AM   #33
Guru
 
ranger42c's Avatar
 
City: Maryland
Country: USA
Vessel Model: 42' Sportfish
Join Date: Aug 2013
Posts: 3,159
Quote:
Originally Posted by Herderings View Post
He "added value" to this boat for it has $150k of upgrades.

My insurance company would tell me I'm dreaming, if I tried that.

I've got a bunch of $Ks of upgrades/replacements/etc. Perhaps would make the boat easier to sell, compared to others, but there's no (or at least only very little) net increase in value.

Let's say a boat is "worth" (really, no kidding) $50K. Add $20K of electronics. The boat is now worth about $50K. OK... maybe $52K. And it might sell faster, relative to other candidates. But it's the bones that establish most of the value; add-ons are often just window dressing.


If it's the one in Annapolis listed at $49K, looks pretty good, at least from pics. No idea about comparative value, though. Must not be too far away from where we are...

-Chris
__________________
South River, Chesapeake Bay
ranger42c is offline   Reply With Quote
Old 11-11-2015, 11:46 AM   #34
Veteran Member
 
City: Western MD
Country: USA
Join Date: Feb 2015
Posts: 32
I did search for values... Nada guides does not have these boats listed (in that year they were made by Valor Marine) but did get a BUC value at $60k.
Herderings is offline   Reply With Quote
Old 11-11-2015, 12:30 PM   #35
Guru
 
City: Northport
Country: USA
Join Date: Aug 2015
Posts: 814
"I am feeling that I am making myself buy this boat because of the upgrades & value-- but it really would be uncomfy that small"


This is all I need to read to know what you should do.
Good luck with your search
smitty477 is offline   Reply With Quote
Old 11-11-2015, 12:42 PM   #36
FF
Guru
 
FF's Avatar
 
Join Date: Oct 2007
Posts: 16,534
IF the "upgrades are electronic toys , their current value is close to ZERO.

By time most electric toys are installed they are 3 models out of date.

If a fine genset is installed , a hydraulic system and windlass or a a stability setup or bow and stern thrusters , some value will be realized.

Same for a marine (not ex truck parts) heating plant or central air cond.
FF is offline   Reply With Quote
Old 11-11-2015, 12:48 PM   #37
Veteran Member
 
City: Western MD
Country: USA
Join Date: Feb 2015
Posts: 32
Yes... right. The upgrades includes all new (quality) windows and frame, new aluminum tanks and their support pad, new a/c, new generator in sound thing, new (quality) upholstry, new electronic ac/dc panel... that's most of the big stuff (no new electronics.)
Herderings is offline   Reply With Quote
Old 11-11-2015, 01:10 PM   #38
Guru
 
City: Hotel, CA
Country: Fried
Join Date: Sep 2011
Posts: 8,328
Quote:
Originally Posted by Herderings View Post
Yes... right. The upgrades includes all new (quality) windows and frame, new aluminum tanks and their support pad, new a/c, new generator in sound thing, new (quality) upholstry, new electronic ac/dc panel... that's most of the big stuff (no new electronics.)
Every item you listed is standard maintenance. Not a single upgrade.
__________________
Craig

It's easier to fool people than to convince them that they've been fooled - Mark Twain
CPseudonym is offline   Reply With Quote
Old 11-11-2015, 02:16 PM   #39
Enigma
 
RT Firefly's Avatar
 
City: Slicker?
Country: Bumpkin?
Join Date: Oct 2007
Posts: 9,997
Greetings,
Mr. H. Post #'s 33, 36 & particularly 38 say it all, potential IRS issues aside. You said yourself the boat would be too small. Move on man, move on. The more information you post here, the more this boat is sounding like "lipstick on a pig".
__________________
RTF
RT Firefly is online now   Reply With Quote
Old 11-11-2015, 03:25 PM   #40
Senior Member
 
Blissboat's Avatar
 
City: Jacksonville Beach, FL
Country: USA
Vessel Name: Shallow Minded
Vessel Model: Shoal Cat
Join Date: May 2015
Posts: 411
CPseudonym wrote: "Every item you listed is standard maintenance. Not a single upgrade."

Have to disagree. Plenty of owners limp along with marginal windows and tanks, and represent them to prospective buyers as acceptable. In my book, those are capital expenditures that significantly modernize a decades-old boat by extending its useful life.

Now, it's true that the cost to perform those upgrades (windows and tanks) does not affect resale value on anything like a dollar-for-dollar basis. It may even be as low a ratio as nickels and dimes on the dollar. But if done right, they add a lot to this boat's utility and marketability.

For my money, $35K for this Sundowner tug yacht looks like a genuine deal, if it's the boat you want. As another poster on this Forum insightfully observed (on another thread), we should be mindful of whether we are looking for a deal or for a boat. Ideally, you'll get both.
__________________

Blissboat is offline   Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off





All times are GMT -5. The time now is 08:37 PM.


Powered by vBulletin® Version 3.8.8 Beta 4
Copyright ©2000 - 2017, vBulletin Solutions, Inc.
Search Engine Optimization by vBSEO 3.6.0
Copyright 2006 - 2012