When answering, please cite specifics. Which section of the tax code deals with this abuse? What cases have been prosecuted?
This SO answer describes an abusive tax scheme involving non-cash assets being donated at inflated values. How does the tax code prevent this?
If you have a software company, that can produce a box of software for $5, but the box sells for $100. (You have to make a profit and cover development costs)
But then you give these boxes to charity, that is a cost of $5 each and a tax rebate of $100 x 40% = $40. A profit of $35 per donation of $5.
Which was critiqued as follows:
Critique: This sounds like an intentional abuse of the system. The IRS often investigates schemes where non-cash assets are donated for an inflated "full value". – Chris W. Rea Apr 7 '12 at 16:24
For clarity: The question is: How does the tax code prevent this? Sub questions to guide your answer are: Which section of the tax code deals with this abuse? What cases have been prosecuted?