Many brokers are aware of the potential benefits a vessel Donation will provide their client. As an Overview:
Immediate commission and/or referral fee paid upon donation to the referring broker and the listing broker.
Second commission, upon the sale, will be earned as a central agency is returned to the listing broker.
AFF prepares a professional, client ready proposal for you to email to the prospective donor.
The proposal will quantify the tax benefits and bargain sale cash we may be able to provide to your client.
Unique Distinguishing Points to Share With the client:
Material Improvements used to qualify the donation and allow the transfer of title (via your central agency) to take place as soon as they are completed. This requires investment on the part of AFF for not only maintenance items, but enhancements (material improvements) that we fund to comply with the IRS rules to protect the donation. It is the adherence to these details and AFF's ability to make these capital investments that differentiates our company from those with lesser resources, to insure that these rules are rigorously complied with.
Client Ownership Expenses Stop: (dockage, insurance, maintenance, etc.), A client will be concerned over the cost of money which is tied up in an unproductive and unused asset. There is also the intangible worry about weather, deterioration, and lack of use.
Client Donation Timing:
When the client is ready to move forward, the broker can discuss that the donation process can be completed in a matter of weeks! The client in some cases can realize benefits during the year of donation. Of course, donors have the year of the donation plus an additional five years to fully use a carry-forward of any unused tax credits.
AFF offers a free consulting from their knowledgeable staff to address any issues with the donor or his accounting or legal advisors. We can answer many questions and point them to the relevant IRS documents found under publications and forms. We encourage a conference call with the broker, donor, and their advisors to address any issues and provide additional information desired.
What Are The Qualifying Criteria?
Here are a few qualifications to help determine a good donation candidate:
Determining the donor's marginal tax bracket (higher the tax bracket, the higher the benefit.)
If there is debt on the vessel, the donor would be required to retire it prior to donation.
A vessel to be donated at fair market value has to have been owned for at least one year.
The donor must be willing to fund the arm's-length appraisal of the vessel, which is the only donor expense.