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MShore Law
MShore Law, Attorney
Category: Business Law
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Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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I want to raffel a vehicle via the internet. I will donate

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I want to raffel a vehicle via the internet. I will donate the proceeds. Will I encounter complications doing this in California or would another state, such as Nevada, be easier to work with? I have minimum and maximum parameters on the number of tickets to be sold so the odds are finite.
Thank you for the post, I am happy to assist you by answering your questions. Will you donate all of the proceeds to a charity or only a portion?
Customer: replied 3 years ago.

Sorry, we were out of town longer than expected.


In response to your question: We will donate all money with exception of direct expenses related to vehicle i.e. we had to pay it off to get title. It needed to be serviced, including a new battery, and costs to register and insure also added to the bill. We may have some costs to raffle, such as establishing a website, postal address, etc.


Beyond that yes, all proceeds will be donated.

Thank you David, did you already pay off the vehicle and are seeking reimbursement from the raffle? Essentially, what I am asking is whether the raffle is a means of repairing the vehicle then disposing of the vehicle to avail to you a tax deduction on the value of the vehicle in its improved/repaired condition?
Customer: replied 3 years ago.

Actually I paid the vehicle off several years ago. It was in danger of repossession. It was also impounded. Any costs incurred were simply to make the vehicle street worthy after several years in storage.


Hmmm! Maybe more complicated than I first thought. The names on the vehicle belong to my wife and my son, who is an adult. When I say "I" that's me orchestrating the situation. My wife will actually be signing off on the title. Our son does not need the vehicle any longer, but he does need the value which a raffle could bring. After the expensed I previously described my wife will be donating all the proceeds to a charitable trust.


 


I don't know if that makes things better or worse. I hope it answers your question.

Thank you David, your son would not be entitled tor reimbursement for the sums paid to pay off the vehicle, his only reimbursement would be with respect to the fees incurred for the auction. Also, in order to auction the vehicle the legal owners (your wife and son) must consent. From your description, your son desires to sell the vehicle via an auction and retain a portion of the proceeds. In CA, raffling off personal property in the manner you contemplate is a prohibited practice (as it amounts to holding a lottery). CA requires that 90% of the receipts go to the charity. For your reference, this is a CA attorney general article on the subject summarizing the applicable law: http://oag.ca.gov/charities/raffles I want to make sure your questions are answered, if this does not answer your question or if you have any follow up questions, please let me know. If this does answer your question, please positively rate my answers.
Customer: replied 3 years ago.

You answered part of my question and I will research the CA attorney general's article for more information.


Just for reference, my son did not pay off anything. However, my wife and I did. I would assume that as both their names are XXXXX XXXXX title neither is entitled to recover the sums required to pay off the contract. Ergo, as CA is a community property state, I am not entitled to the sums either?


Part two of the original question. Would it be more or less difficult to do this in Nevada? Do the rules and/or laws in Nevada regarding rafflle differ from California?

Yes, it would be easier in NV as NV does not have a strict percentage like CA, but bear in mind that the fundamental premise of your contemplated venture is inconsistent with charitable raffle laws as the primary purpose of your raffle is personal gain (i.e. reimbursement of expenses related to the vehicle and the remainder, if any, would go to a charity). To illustrate, if 80% of the raffle revenue goes to you (your family) and 20% goes to charity, this would not be deemed a charitable raffle, it would be deemed an unlawful lottery. The relevant NV laws on charitable raffles are: NRS 462.190 Limitations on compensation for prizes and supplies and compensation of persons for services; exceptions. A qualified organization shall not:

1. Compensate any person for the provision of prizes and supplies used in the operation of a charitable lottery, except to pay the fair market value of the prizes and supplies necessary for the operation of the charitable lottery.

2. Provide:

(a) Any compensation to a person who is not a regular employee of the organization; and

(b) Any additional compensation to a person who is a regular employee of the organization,

Ê for his or her services in organizing or operating a charitable lottery or assisting in the organization or operation of a charitable lottery. This subsection does not prohibit a qualified organization from compensating a person for the fair market value of services that are ancillary to the organization or operation of a charitable lottery.

(Added to NRS by 1991, 2260)

NRS 462.200 Limitation on expenditure of net proceeds of charitable lottery; annual financial report required.

1. A qualified organization shall expend the net proceeds of a charitable lottery only for the benefit of charitable or nonprofit activities in this state.

2. A qualified organization approved by the Executive Director shall, after the completion of a charitable lottery and no later than the end of the same calendar year, submit to the Executive Director a financial report on the charitable lottery. The financial report must include a statement of:

(a) The expenses incurred in the operation of the charitable lottery; and

(b) The amount and use of the net proceeds of the charitable lottery.

(Added to NRS by 1991, 2261)

Customer: replied 3 years ago.

You need to get this conscept behind you.


I am not proposing to conduct a raffle for the purpose of personal gain. I simply asked if I could recover my costs of preserving the asset. Apparently I cannot do that directly. However it does appear that I can take a tax deduction to a charitable entity for the full value of the vehicle.


The charitable entity can use the raffle to unlock the potential value which I believe to be many times greater than its appraised value.


If it is true that I can take the tax deduction then I will review the appropriate sections of CA and NV law and dedide which state, if either should be used to domicile the charitable entity.

David, respectfully, XXXXX XXXXX stated "with exception of direct expenses related to vehicle i.e. we had to pay it off to get title. It needed to be serviced, including a new battery, and costs to register and insure also added to the bill. We may have some costs to raffle, such as establishing a website, postal address, etc" and "Our son does not need the vehicle any longer, but he does need the value which a raffle could bring." it would appear that the primary purpose of the raffle is to recoup expenses (as you defined the term) as the expenses would be paid first and the remainder, if anything, given to charity.

 

 

Regarding the tax deduction, I would be doing you a disservice to answer unequivocally that you can take the tax deduction as I do not have enough information on your tax situation to do so. I can state that generally persons whom donate a vehicle to charity can take a tax deduction for the full value of the vehicle.

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