Solving the tax puzzle
Thursday, July 16, 2009
OK, it's really just the 1040 puzzle.
And iI'm talking about an actual jigsaw puzzle, not the way to finally put together all our various tax pieces.
The TaxProf Blog reports that two of his fellow tax professors from Indiana University Maurer School of Law in Bloomington have completed a puzzle that depicts the granddaddy of individual tax returns.
As TaxProf notes, and shown in the image excerpt at left (and the full puzzle photo on his site), even when dealing with taxes for fun and games, there are still "loopholes."
Unfortunately, I couldn't locate anyone selling Form 1040 jigsaw puzzles.
My Googling, however, did turn up a custom jigsaw puzzle maker who includes a tax component in connection with his product.
The Connecticut-based MGC's Custom Made Wooden Jigsaw Puzzles tells potential customers that "from time to time, you will see puzzles listed on this page that you can fully deduct from your annual income taxes."
The puzzle manufacturer periodically offers certain of his creations for sale, but instead of buying one of these designated puzzles, you send a check for the product amount and make it payable to one of the charities the company has selected.
MGC gives your check to the specified charity on your behalf. Then MGC sends you the puzzle, a donation on its part. It also covers the shipping costs for you.
As long as your check is payable to a qualified charity, this somewhat roundabout process should be fine with the IRS.
However, it looks to me that since you are getting something -- a custom, handmade wooden puzzle -- for your donation, then the value of that puzzle has to be accounted for in your deduction amount.
So if you "donated" an amount that reflects the value of the product incentive you received, then you'll zero out your deduction. In fact, you got more than you gave, since you didn't even have to pay delivery costs.
The loophole here might be that since the charity itself didn't offer the gift, you don't have to take that into consideration. Any tax pros want to weigh in with your take on this process?
But even if you don't get a tax break, at least you get the puzzle and the charity gets some money. And MGC shows that it's creative in more than just making puzzles!
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