Can I have an opinion?

[Arthur Rubin]

IIRC, when you give "appreciated property" in Canada, even to a charity where a cash gift would be deductible, you are liable for capital gains tax as if you had sold it. Is that correct, Burnaby?

Yes, at least it was true when I worked in the area but that is quite a while back. The reasoning is obvious. If you make a cash donation to a charity then the money is assumed to come from after tax income. You get a deduction to the extent of the cash to partly compensate for your generosity.

The US doesn't have "deemed sale", and US tax law on charitable donation is quite clear. If you donate property, and it was held less than a year, you can deduct the lesser of basis and FMV. If held more than a year, you can deduct FMV. From this deduction, you remove the value of things or services given you by the charity or at the charity's request.

There are substantiation and, potentially, assessment requirements, as well.

[Arthur Rubin]

In effect, the Supreme Court ruled that on these facts, the Treasury Department -- and the Tax Court -- were correct. Although there was no legal obligation on the part of Berman to transfer the auto to Duberstein, the receipt of the auto was taxable to Duberstein as income; it was not a gift for Federal income tax purposes.

I don't have any clients who are winners on game shows; however, the hypothetical "Let's Make a Deal" scenario, when the winner has a choice of doors; behind one door is a goat; behind another door is a year's supply of "Rice-a-Roni"; behind the third door is a car. Suppose the "winner" ends up with the goat. Is he taxed on the FMV of the goat? Similarly, in a less hypothetical scenario, he wins the car, but cannot legally take possession of the car. (In some states, you must have a drivers license to own a car.) Is he taxable on the FMV of the car, even though there is no actual benefit? If it's a new car, and he could take possession of the car, and sells it immediately, is he taxed on the FMV of a new car, but gets the cash value of a "gently used" car?

In these scenarios, there is no question that the winner is taxed on the FMV of the item; but FMV can be negative, in some cases.