QUESTION ON DEDUCTING USED CLOTHING

I am cleaning closets and will be giving a lot of clothing to the Salvation Army. Can I deduct this off of my taxes?

Amid

Amid, good idea if you are itemizing your deductions, which is sometimes called the “long form.” If you do itemize then the fair market value of the clothing will be deductible. This would also include household items such as old furniture.

To be deductible, clothing and household items donated to charity generally must be in good used condition or better. If it is not in “good” condition you would need an appraisal if the value is over $500. I don’t know how to get an appraisal of old clothing, but those are the rules. You would also need an appraisal if the fair market value is over $10,000.

Larry Kopsa CPA

QUOTE OF THE WEEK

"Speaking of the budget, in his speech on the economy, President Obama said that we have to 'continue to spend our way out' of the recession. Now, I don't know much about economics, but aren't we like a trillion dollars in debt? Spending our way out of the recession? Isn't that like trying to drink your way out of alcoholism? I'm just saying." ~Jay Leno Monologue

WALL STREET JOURNAL OPINION

'Health Care Bill Represents Change Nobody Believes In'

(Wall Street Journal editorial) -- In its Dec. 21 editorial, The Wall Street Journal writes that the Senate health care bill "is so reckless that it has to be rammed through on a partisan vote on Christmas Eve." The editorial states, "Barring some extraordinary reversal, it now seems as if (Senate leaders) have the 60 votes they need" to approve "the 2,100-page bill." The editorial notes a cost analysis that was recently released by the insurer WellPoint, finding "that a healthy 25-year-old in Milwaukee buying coverage on the individual market will see his costs rise by 178%. A small business based in Richmond with eight employees in average health will see a 23% increase. Insurance costs for a 40-year-old family with two kids living in Indianapolis will pay 106% more." The editorial predicts "steep declines in choice and quality," resulting from actions such as the health care bill's "$2 billion annual tax — rising to $3 billion in 2018 — that will be leveled against medical device makers, among the most innovative U.S. industries." Finally, the bill will "blow up" the federal deficit, the editorial states. "Even though Medicare's unfunded liabilities are already about 2.6 times larger than the entire U.S. economy in 2008, Democrats are crowing that ObamaCare will cost 'only' $871 billion over the next decade" as it "sets up government-run 'exchanges' that will subsidize insurance for those earning up to 400% of the poverty level, or $96,000 for a family of four in 2016." <http://online.wsj.com/article/SB10001424052748704398304574598130440164954.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsTop>

OPINION: 'WHEN IT COMES TO CLIMATE CHANGE, FOLLOW THE MONEY'

(Wall Street Journal) -- Wall Street Journal columnist Bret Stephens writes that citizens should employ "follow-the-money methods" when it comes to concerns regarding leading climate scientists who have worked "in tandem to block freedom of information requests" and "obscure, destroy or massage inconvenient temperature data—facts." Stephens writes: "Consider the case of Phil Jones ... the man at the heart of climategate. (B)etween 2000 and 2006, Mr. Jones was the recipient (or co-recipient) of some $19 million worth of research grants, a six fold increase over what he'd been awarded in the 1990s." More than $94 billion in government money has been spent globally this year on "green stimulus," according to one estimate. See more at <http://online.wsj.com/article/SB10001424052748703939404574566124250205490.html?mod=WSJ_hp_mostpop_read>

TAX BREAK FOR TIRADE?

Serena Williams, verbally attacked a line judge during the U.S. Open Championship and was hit with at $175,000 fine. The question is “can she deduct the fine?” Here is a interesting analysis. (Maybe this is just interesting to us tax people.)

Can Williams get a tax break for her tirade?

STATUS OF ESTATE TAXES

Around ten years ago, congress passed a law stating that in the year 2010 there would be no estate taxes. Nobody in the tax industry felt that this would really happen. Imagine this, Warren Buffett, whose worth billions of dollars in 2010, dies and he completely escapes estate taxes. The joke in the industry was to “advise your clients to die in 2010.” That’s the kind of humor that we tax people have.

Well, everybody thought the law would change and then five years passed; and now we are here three weeks before the end of the year and congress is now starting to say, “We’re going to lose a lot of money if there are no estate taxes in 2010; maybe we should change the law.”

Now they are discussing the possibility of making sure that there is an estate tax in 2010. Best guess is that they’ll pass a law sometime before the end of the year. Maybe they’ll leave the estate tax rate at three and one half million dollars. Who knows?

Oh, that’s not all, if congress does nothing the estate tax rate will revert back to $1,000,000 in 2011 with a high rate of 55%.

We’ll keep you posted as congress deals with this issue at the last minute.

The Washington Post has more information on the Estate Tax. Click here to read: Extending The Estate Tax.

QUOTE OF THE WEEK

"Old age is like climbing a mountain.

The higher you get, the more tired and

breathless you become, but your view

becomes much more extensive."

Ingmar Bergman,

quoted in the Victoria, British Columbia, Advocate