**[I. INTRODUCTION:]{.underline}**

Per notice in the Federal Register of 7 August 2008, 73 F.R. 45908,
IRS-REG-140029-07, the Treasury Department and the IRS[^1] have
solicited public comments in connection with its proposed revisions to
Treas. Reg. §§ 1.170-0, 1.170-2, 1.170A-13, 1.170A-15, 1.170A-16,
1.170A-17, and 1.170A-18. This Commentary is accordingly submitted.

**[II. COMMENTATOR\'S BACKGROUND & CONTACT INFORMATION:]{.underline}**

**Background:** The Commentator, Kenneth H. Ryesky, Esq., is a member of
the Bars of New York, New Jersey and Pennsylvania, and is an Adjunct
Assistant Professor, Department of Accounting and Information Systems,
Queens College of the City University of New York, where he teaches
undergraduate and graduate courses in Taxation and in Business Law. He
has taught courses in Taxation and in Business Law at Yeshiva
University, Sy Syms School of Business. Prior to entering into the
private practice of law, Mr. Ryesky served as an Attorney with the
Internal Revenue Service (\"IRS\"), Manhattan District. He has authored
several scholarly articles relating to taxation, and submitted
commentary for the record in connection with the House Ways and Means
Oversight Subcommittee Hearing of 24 July 2007 on Tax-Exempt Charitable
Organizations (\"Hearing of 24 July 2007\").
\[\<<http://waysandmeans.house.gov/hearings.asp?formmode=view&id=6370>\>\].
On 24 January 2007, Mr. Ryesky presented a Continuing Legal Education
Seminar entitled \"Tax-Exempt Organizations & the Pension Protection Act
of 2006\" in Philadelphia for the National Business Institute.

**Contact information:** Kenneth H. Ryesky, Esq., Department of
Accounting & Information Systems, 215 Powdermaker Hall, Queens College
CUNY, 65-30 Kissena Boulevard, Flushing, NY 11367. Telephone
718/997-5070 (vox), 718/997-5079 (fax). E-mail: khresq@sprintmail.com.

**Disclaimer:** This Commentary reflects the Commentator\'s personal
views, is not submitted for, on behalf of, or at the behest of any other
person or entity, and does not necessarily represent the official
position of any person, entity, organization or institution with which
the Commentator is or has been associated, employed or retained.

**[III. BASIC PRINCIPLES FOR TAX REGULATIONS:]{.underline}**

Like regulations issued by any other administrative agency, Tax
regulations serve to implement into practice the will of the
legislature. Indeed, IRC § 7805(a) specifically empowers and commands
the Secretary of the Treasury to prescribe such regulations for
precisely such a purpose, including and especially where, as here, such
regulations are necessary to effect Congressional modifications to the
Internal Revenue Code.

Certain objectives ought be targeted in carrying out taxation policy.
The salient objectives for the instant rulemaking should include
fairness to the taxpayer, clarity as to what is expected of the
taxpayer, and the functional integrity of the taxation system. The tax
practitioner community, which has long played a salient and salutary
role in facilitating tax compliance, must understand the tax regulations
and tax policies. Moreover, as mentioned by Chairman Lewis in his
Opening Statement of the Hearing of 24 July 2007, tax policy must
encourage and facilitate a strong, active and healthy nonprofit sector.

**[IV. CRITIQUE OF THE INSTANT RULEMAKING]{.underline}:**

[A. In General:]{.underline}

I.R.C. § 170, which governs the allowability of contributions and gifts
to charitable and other not-for-profit entities, was significantly
amended by § 883 of the American Jobs Creation Act of 2004, Pub. L.
108-357, 118 Stat. 1418, 1631 - 1632 (2004), and by Title XII of the
Pension Protection Act of 2006 (\"PPA\"), Pub. L. 109-280, §§ 1201 -
1244, 120 Stat. 780, 1064 - 1108 (2006). These amendments to I.R.C. §
170 impact virtually every taxpayer who would claim a deduction under
I.R.C. § 170. It accordingly behooves the IRS to promulgate regulations
to explain and implement the new rules.

[B. Removal of Treas. Reg. §§ 1.170-0, 1.170-2, 1.170A-13(a)(3),
1.170A-13(b)(3)(i)(B) and 1.170A-13(d):]{.underline}

These regulatory sections and subsections are now obsolete and, in some
respects, have long been obsolete. The excision of such surplus verbiage
in the Treasury Regulations is quite appropriate, and will, if anything,
reduce the propensity for confusion and ambiguity for those consulting
the Regulations.

[B. Treas. Reg. § 1.170A-15:]{.underline}

\"\[A\]n income tax deduction is a matter of legislative grace and that
the burden of clearly showing the right to the claimed deduction is on
the taxpayer.\" *Interstate Transit Lines v. Commissioner*, 319 U.S.
590, 593 (1943). PPA Title XII imposes significant documentation
requirements upon taxpayers claiming a charitable deduction, including a
most far-reaching requirement of PPA § 1217, codified at I.R.C. §
170(f)(17), which requires, as substantiation for all cash
contributions, \" a bank record or a written communication from the
donee showing the name of the donee organization, the date of the
contribution, and the amount of the contribution.\"

Treas. Reg. § 1.170A-15 appropriately implements and clarifies PPA §
1217 and the other enhanced documentation requirements needed to avert
disallowance of cash contribution deductions under I.R.C. § 170(f).

Treas. Reg. § 1.170A-15(b)(3) is particularly noted; paragraph (b)(3)
specifically includes electronic mail correspondence as an acceptable
medium for a required written communication. New innovations in text
technologies have long been resisted by the legal establishment. Due, no
doubt, to the reluctance of various vexatious functionaries in business
and government to accord documents made by the typewriter full parity
with other legal documents, various state legislatures of yore found it
necessary to enact legislation to give validity to typewritten
documents. *See, e.g.* 1895 Pa. Laws 125, 1898 N.J. Laws 71, 1899 Conn.
Pub. Acts 75. When the Commentator was employed by the IRS, his manager
decidedly discouraged the use of certain IRS forms printed out on the
portable (by late 1980\'s standards) computers issued to the Commentator
and his colleagues, not because the manager wanted for decisiveness,
resolve, bravery, or legal clarity, but because said manager knew all
too well that others downstream in the IRS bureaucracy would likely
question forms printed in such a then new and novel medium. And even in
2008, at least one judge still refuses to use e-mail as a mode of
communication, despite the explicit and publicized policies of his court
administrators to encourage the use of such e-mail. *See* Justice Thomas
Feinman, \"E-Mails Not Accepted,\" Letter to the Editor, N.Y.L.J.,
4/23/2008, p. 2, col. 6 (\"Please be advised that Part 20 of the
Undersigned, of the Supreme Court, County of Nassau, does not accept
e-mails. Counsel should refer to this Part\'s rules posted online with
the New York Law Journal concerning communications made to this
Part.\").[^2]

With such official imprimatur in the Treasury Regulations, the medium of
e-mail can now be efficiently and inexpensively used by the charitable
organizations for acknowledgments of donations, and such acknowledgments
can be readily accepted by charitable donors, without fear that some
insolent IRS agent might balk at allowing the deduction based upon
e-mail documentation. This simplifies the charitable contribution
process, to the good weal of the charitable sector.

Obviously, the prospect of unscrupulous taxpayers manufacturing false
e-mail documentation cannot be ignored. The IRS and the state taxation
authorities have disallowed charitable deductions substantiated by paper
documents that are bogus, altered or otherwise of questionable origin.
*United States v. Adu*, 770 F.2d 1511 (9th Cir. 1985), *cert. denied*
475 U.S. 1030 (1986); *United States v. Gleason*, 766 F.2d 1239 (8th
Cir. 1985), *cert. denied* 474 U.S. 1058 (1986); *Muhammad v.
Commissioner*, T.C. Summary Op. 2006-174, n. 5; *Paige v. Commissioner*,
T.C. Memo 1994-638; *Svedahl v. Commissioner*, 89 T.C. 245 (1987);
*Packer v. Commissioner*, T.C. Memo 1986-532; *Jordan v. Commissioner* ,
T.C. Memo 1986-389; *Matter of Paul Tam*, N.Y.S. Div. of Tax Appeals,
Determination DTA Nos. 819366 & 819367 (27 May 2004). There is no reason
why the IRS and the state taxation auditors should not be able to meet
the challenges posed by e-mail documentation of questionable validity or
provenance, just as they have successfully done in cases of questionable
paper documentation.

[C. Treas. Reg. §§ 1.170A-16 & 1.170A-17:]{.underline}

The donations of non-cash property to various charitable and other
non-profit organizations has long redounded to the benefit of America.
The land upon which the State University of New York at Stony Brook
sits, the Charles L. Blockson Afro-American Collection of the Temple
University Libraries, and even the Library of Congress itself were all
originally non-cash properties whose benefits their donors saw fit to
avail, through not-for-profit entities, to future generations.

Valuation of non-cash property is an art as well as a science, *see,
e.g,. Estate of Friedberg v. Commissioner*, T.C. Memo 1992-310; *City of
Atlantic City v. Ginnetti*, 17 N.J. Tax 354, 375 (1998), *aff\'d* 18
N.J. Tax 672 (N.J. Super, App. Div., 2000). Accordingly, donations of
property other than cash are, and always have been, susceptible to
valuation ambiguities and discrepancies, and differences of opinion
among experts. *See, e.g,. Jarre v. Commissioner*, 64 T.C. 183 (1975),
*acq*. 1975-2 C.B. 2; *Mauldin v. Commissioner*, 60 T.C. 749 (1973),
*acq*. 1974-2 C.B. 1; *Estate of O\'Keeffe v. Commissioner*, T.C. Memo
1992-210. In light of the diverse factors involved, any given appraisal
of non-cash property may or may not be accurate. The proposed new
Treasury Regulation sections, while unable to ensure 100 percent
accuracy in the valuation of non-cash charitable donations, do set
standards that impart some regularity and transparency to the appraisal
process, and serve to maintain the integrity of the system, thereby
enabling America\'s charitable sector to continue to receive non-cash
property donations which, in turn, can be placed into service for the
public good.

Unfortunately, exempt organizations have been known to be participants,
unwitting and otherwise, in tax evasion schemes involving donations of
non-cash property. *See, e.g.* *St. German of Alaska Eastern Orthodox
Catholic Church v. United States*, 840 F.2d 1087 (2d Cir. 1988); *see
also* IRS Notice 2004-30, 2004-17 I.R.B. 828 (26 April 2004). Donations
of non-cash property, then, need to be both encouraged and scrutinized.
The two new Treasury Regulation sections together specify the rules for
both donor and appraiser, and thus continue to encourage non-cash
property donations while setting forth ascertainable standards by which
donors and appraisers might be evaluated and reviewed. Had such
requirements been in force and enforced, they may well have, for
example, averted the fraud perpetuated upon the IRS through inflated
appraisals in the case of *Angell v. Commissioner*, T.C. Memo 1986-528,
*aff\'d* 861 F.2d 723 (7th Cir. 1988).

[D. Treas. Reg. § 1.170A-13(a)(2)(i)(C):]{.underline}

One subparagraph which the instant rulemaking action totally ignores is
Treas. Reg. § 1.170A-13(a)(2)(i)(C), which provides that \"an emblem,
button, or other token traditionally associated with a charitable
organization and regularly given by the organization to persons making
cash donations\" is an indicium of reliability of the taxpayer\'s record
in the absence of a canceled check or receipt from a charitable donee.

As this Commentator observed in his Comments for the Hearing of 24 July
2007, familiar tokens such as the American Legion red poppy, the
Childrens Hospital of Philadelphia daisy and the Lions Club candy
wrappers are now of little or no use to the taxpayer wishing to
substantiate deductions of small donations, in light of the PPA § 1217
requirement, codified at I.R.C. § 170(f)(17) that the taxpayer obtain
and retain \"a bank record or a written communication from the donee.\"

This Commentator further noted the irony that while I.R.C. §
170(f)(8)(E) specifically authorizes the IRS to relax documentation
requirements with respect to a quid pro quo in charitable donations of
\$250.00 or more, I.R.C. § 170(f)(17) emphatically brooks not exceptions
to the requirement of a bank record or written communication from the
donee. In this instant rulemaking proceeding, the IRS also notes that no
\"de minimis\" exception to the bank record or written communication
requirement is permissible without further specific leave of Congress,
73 F.R. at 45910.

Given the uselessness under I.R.C. § 170(f)(17) of the poppies, daisies,
candy wrappers and other such tokens, absent any signals that Congress
intends to authorize a de minimis exception, the IRS should consider
taking steps toward removing Treas. Reg. § 1.170A-13(a)(2)(i)(C) as a
deadwood regulation, just as it now proposes to prune the dead wood that
now is Treas. Reg. §§ 1.170-0, 1.170-2, 1.170A-13(a)(3),
1.170A-13(b)(3)(i)(B) and 1.170A-13(d).

[E. Effective Date:]{.underline}

The proposed effective date of the Proposed Regulations would be the
date after publication in the Federal Register as Final Regulations.
This certainly is appropriate, however, the Commentator notes that
Proposed Treas. Reg. § 20.2036-2, 48 F.R. 35143 (3 August 1983), and
Proposed Treas. Reg. § 1.280A-3, 45 F.R. 52399 (7 August 1980), have
been been hanging fire for more than a quarter century without
finalization in the Federal Register. Though the IRS must give due
regard and deliberation to the learned comments proffered and to be
proffered by the interested public, leisures such as those taken with
respect to Proposed Treas. Reg. § 20.2036-2 and Proposed Treas. Reg. §
1.280A-3 should not be taken by the IRS in bringing this instant
rulemaking action to finalization.

**[V. SUMMATION & CONCLUSION:]{.underline}**

[A.]{.underline} The instant Proposed Regulations are basically
appropriate, and quite consistent with the appropriate tax policy
objectives.

[B.]{.underline} The old obsolete sections proposed for removal from the
Treasury Regulations are in fact obsolete and should be removed.

C. The new rules proposed for cash donations, non-cash property
donations, and for the qualification and conduct of appraisers of
non-cash property constitute a reasonable and workable scheme.

D. The IRS should consider the question of whether Treas. Reg. §
1.170A-13(a)(2)(i)(C) is still relevant, in light of I.R.C. §
170(f)(17); and if such subparagraph no longer has any relevance, then
the IRS should consider removing it from the Treasury Regulations.

[E.]{.underline} With due regard to the public comments and testimony,
the instant proposed revisions should be finalized without the undue
delay that has attended to the finalization of other proposed
regulations.

20 August 2008

Respectfully submitted,

Kenneth H. Ryesky, Esq.

[^1]: Promulgating regulations is an interactive process between the IRS
    and the Department of the Treasury proper, Treas. Reg. § 601.601.
    For the sake of simplicity, this Commentary will refer to such a
    collaborative process in terms of the IRS promulgating the
    regulations.

[^2]: The apparent irony in the juxtaposition of a Luddite attitude
    towards e-mail on one hand, and a direction to Counsel to use the
    Internet on the other, is not lost on this Commentator.