When it comes to doing your taxes, it’s usually a good idea to read the fine print. Joseph and Shirley Mohamed learned this the hard way after losing out on a big deduction because of a technicality.
In 2003 and 2004, the couple donated five of their high value properties to a special trust, reports the Journal’s Laura Saunders.
To take the deduction from their taxes, the properties needed to be appraised so Mohamed, a certified real estate agent and appraiser, decided to perform the valuation himself.
He erred on the side of caution so as to not claim too much. However, when the IRS audited the couple’s 2003 return in April 2005, it rejected the self appraisal.
The Mohameds called in the professionals to reassess the properties, who valued them at almost $2 million more than Mohamed originally claimed ($20.3 million versus $18.5 million).
Mohamed admits to not reading the directions on his tax forms, as noted in the court’s decision to flat-out deny the deduction.