Cash For Clunkers sofas? Be careful about tax implications

The New York Times reports on a new trend that seems to be sprouting up in the furniture business: Buy a new sofa and get a discount by "trading in" your old one, which is then donated to charity.

Here's where it might get just a little bit complicated. According to the Times, "At Pacific Manufacturing in Phoenix, which sells custom upholstered goods to interior designers, a used piece of furniture earns clients 10 percent off the purchase of any new furniture item or mattress and, after the clunker is delivered to a local charity, a tax-deduction receipt."

The problem? It could get you in hot water with the IRS. I asked forensic accountant Tracy Coenen to explain it: "You can only take a deduction for the amount in excess of the value you received. If the person donates a piece of used furniture with an estimated fair market value of $50, but receives a $125 discount on the purchase of new furniture under this deal, they should not take a deduction for a charitable contribution. If the person donated a piece of used furniture with a fair market value of $500, and receives a discount of $200 on the purchase of new furniture, they could take a deduction for a charitable contribution of $300."

Would you get caught donating it, getting the discount, and deducting it? Of course not: How will the IRS ever know about the discount you received? It's just a question of whether you really want to be a tax cheat, no matter how small the scale.

Coenen also notes that the "fair market value" for used furniture is extremely low -- meaning that it's highly unlikely that you'll be able to get a valuation that would leave you room for a tax deduction after taking the 10% discount.

Unless of course your clunker is an early Eames chair with the Brazilian rosewood veneer.

Your resource on tax filing
Tax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.
What is a Schedule K-1 Tax Form?
The Schedule K-1 is slightly different depending on whether it comes from a trust, partnership or S corporation. Find out how to use this tax form to accurately report your information on your tax return.
Read MoreBrought to you byTurboTax.com
Business Use of Vehicles
If you use vehicles in your small business, how and when you deduct for the business use of those vehicles can have significant tax implications. It pays to learn the nuances of mileage deductions, buying versus leasing and depreciation of vehicles. Special rules for business vehicles can deliver healthy tax savings.
Read MoreBrought to you byTurboTax.com
How to Change Your Tax Filing Status
Choosing your filing status is an important first step for preparing your federal tax return. Your filing status determines your standard deduction, tax rates and brackets.
Read MoreBrought to you byTurboTax.com
A Guide to Self-Employment Taxes for Contractors, Freelancers, and Beyond [Infographic]
If you work for yourself and don't call anyone your boss, you're likely self-employed. This carries advantages, like not having a manager and deciding your own hours. But it also comes with trade-offs, like paying the self-employment tax and paying for your own employee benefits.
Read MoreBrought to you byTurboTax.com