When customers abandon their propertyAugust 20, 2009: 10:22 AM ET
A dry cleaner considers turning customers' absentmindedness into a tidy tax break.
Taylor, Jackson, Miss.
I own a dry cleaning business and was wondering what to do with all the forgotten or left-behind clothes. They date back a few months or as far back as a year. I read that by donating them I could get a tax write-off.
By Kathleen Ryan O'Connor, CNNMoney.com contributing writer
You can donate them, but you might want to review your state's abandoned property laws -- and at least one expert we spoke to says you can't take a tax write off.
Here's why: "A business charitable tax deduction has to have a tax basis," says Philip R. Lieb, an accountant in White Plains, N.Y. "The clothes cost the dry cleaner nothing. The cost of cleaning has already been expensed through the dry cleaner's business operation. The business charitable deduction would be nothing."
And, depending on the state, you also can't just dump them off at the local Goodwill and call it a day.
Many states place the disposal of forgotten clothes under abandoned property laws, and the guidelines can be quite specific, says Ann Hargrove, director of special events with the industry trade group the National Cleaners Association.
One New York cleaner ran into legal trouble for trying to sell clothes that had been left for more than six months, Hargrove recalls. In New York, the property cannot be sold, only donated to a charity.
And to give you an idea of the specificity of the law, at least in New York: Cleaners must give notice to customers that abandoned dry cleaning will be donated after six months, and "such notice shall be at a minimum 11 inches in height by 17 inches in length and the printed characters shall be 1.25 inches in height and at least .5 inches in width," the law decrees.
The cleaner must also keep the donation receipt, with the original receipt for the customer's drop-off, for a full three years after the donation.
Mississippi law is a lot less clear.
Kathryn Stewart, a Mississippi Treasury Department spokeswoman, says she can't find anything that places clothes left at a dry cleaner under the state's unclaimed property laws, which cover cash and securities.
Your fellow cleaners in Jackson seem to work under an informal guideline of considering items abandoned anywhere from 30 days to a full year after they're dropped off, says Ebony Beals, a clerk at Clark Cleaners, which has several locations in Jackson.
They wait a year and then donate the items. "We figure you either forgot or didn't want the items, but we do wait a full year," Beals says of her store's approach.
For additional advice on the tax implications of abandoned items, consider consulting your personal accountant.
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