IRS doesn't like Herbstreit burning down his house.

At the end of the day, having a fire department that has experience in an actual, burning building outweighs the tax implications.

 

I lost my decoder ring today.... what?

 

Giving the fire department experience in battling a fire in a real home in a controlled setting is worth the tax benefits given to Herbstreit as a matter of public policy.

 

Seems like an excessive amount of money to be paid for one valuable training exercise for a local fire department, which probably has to save people from their burning home, what, once every two-three years?.

No "seems" about it, actually.

 

And if you are the person whose house is burning and needs to be rescued, do you believe it is excessive?

The IRS should come out and make a uniform standard, "Giving your house to the local fire department to be torched for training is worth X, regardless of its value." But until they do, I would rather have the Herbstreit get too much of a credit instead of nothing.

 

Wow.

It doesn't happen enough to be worth $150,000 for one exercise.

 

It's similar to someone donating old clothes to a charity. You save on the cost of throwing them out in the trash and you get a tax deduction as well. Donating a house to the fire department is the same thing, albeit the price is a lot higher.

I'm OK with Herbstreit's deduction.

 

I'm OK with it, but not for the full value. Just make it a set number to which everyone is entitled is they decide to donate their house in that way. Now if they truly give it away, like the actual house and the land, divesting themselves fully of the asset, then of course the full deduction is warranted.

 

You are "donating" something to save what will be a massive cost.

Spare me.

Not like other forms of donation in the least.

 

Yep.

 

Define "Massive Cost".

What one person's "Massive Cost" is another person's pennies. And vice versa.

 

The point of the charitable deduction is to exempt someone from paying taxes on income/material goods that they allow someone else to benefit from at -- and this is the important part -- no material benefit to themselves. That's why you can't receive anything in return for a tax-deductible donation.

The Herbstreits incurred no loss here. They deprived themselves of nothing of value to them. They didn't want the house. If the deduction hadn't been there, they would have had the house torn down anyway. So there's no sacrifice being made there. And since they actually benefited from the deal, it's pretty difficult to justify a tax deduction.

Put another way, the assessed value of the house is $330,000. The value of the house to the Herbstreits is $0. Or, more accurately, -$20,000, once you factor in the costs of having it torn down.