Heredering-as a tax attorney, I cant give you advice, but can clarify. TDunn has it basically correct. This may be more ifo than you want or really need, but here goes: The only IRS issue in the value of the boat to be deducted by the donor on his tax return. You are not a party to that transaction and there are o legal issues that involve you. If the value is found to be wrong, the donor loses the deduction and, if the valuation was fraudulent, the charitable organization can be hit with a penalty. As TDunn noted, the Internal Revenue Code and Regs define the value of the donation as the lesser of FMV at the time of the donation, or the price at which the charity sells the property, if sold "with no intervening use or improvements to the donated property by the donee". So, if they sell to you having not used the boat in any way themselves, the donor's charitable deduction is the price you paid. That is what they are trying to avoid. They need to show an intervening use by the charitable organization before selling to you. Two interesting points-(1) for a boat, beyond a small boat, the charitable org is required to have the value of the boat supported by a survery or formal appraisal So, they should have this and could make it available to you. (2) The charitable org has to give the donor a statement that is will use the boat, the duration of the use, the description of the use, and certify that the boat will not be sold during that period. Thus the charter. Since there is no stated period in the Code or Regs the 3 year charter is something I suspect their tax attorney has told them will be safe in almost every circumstance. You haven't mentioned how the charter works. Do you agree on a sale price up front. And then is the charter fee the sales price divided by the 36 months? With perhaps some interest component thrown in? Or, do you truly charter and then purchase for some stated value at the end of the charter? I presume if you walk during the charter period, you simply lose whatever you have paid for the charter. If you are really interested, you may have some negotiating room on the term of the charter, i.e. 12 months, 18 months or 24 months.
All that said, although you have only described the boat as 32', I am assuming a somewhat older boat, certainly not one in the multiple $100K range. If that is the case, I cant imagine that the difference between the donor's value and your purchase price can really be all that much. If you want the boat, my inclination would be to simply tell the funding outfit that you will buy the boat at your price and if the donor wants to get rid of it, he will have to accept that as his charitable deduction. The reason whoulf be pretty straightforward, you want complete ownership now to be able to do what you want with the boat. If they won't agree, walk.
