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Lawyer agrees to injunction in alleged timeshare-donation tax scheme

A Montana lawyer has agreed to an injunction that prevents him from promoting a timeshare program that allegedly allowed unhappy timeshare owners to donate their timeshare to charity and claim an inflated tax deduction.

Lawyer James Tarpey of Bozeman agreed to the injunction along with two companies he founded: Donate for a Cause and Resort Closings Inc., according to a press release and Forbes.

The federal complaint had alleged that timeshare owners paid significant processing fees to Tarpey’s for-profit company, Resort Closings, to transfer the timeshares to Donate for a Cause. Relying on inflated appraisals of their timeshare value from affiliated appraisers, the customers claimed charitable tax deductions for the timeshares and processing fees, the complaint said.

The timeshares are advertised and sold on eBay for significantly less than the appraisal amount, according to the complaint. Since 2010, the timeshare donation scheme generated more than $17.6 million in revenue, yet Donate for a Cause made charitable contributions of less than $1.5 million.

An Internal Revenue Service review of 303 appraisals for timeshares sold on eBay in 2010 found that the average appraisal was $11,187, yet their average sale price on eBay was only $383. Similarly, a review of 1,557 appraisals for timeshares sold on eBay in 2012 found the average appraisal was $10,619, yet the average sale price on eBay was only $429.

 

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