TAX COURT OPINION

Case: Deborah Gail Martin
Docket Number: 7429-22
Judge: Lauber
Opinion Type: bench
Filed: 05/23/2024
Pages: 7

United States Tax Court Washington, DC 20217 DEBORAH GAIL MARTIN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 7429-22. ORDER Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the pages of the transcript of the trial in the above case before Judge Albert G. Lauber at Washington, D.C., on April 18, 2024, containing his oral findings of fact and opinion rendered at the trial session at which this case was heard. In accordance with the oral findings of fact and opinion, a decision will be entered for respondent. (Signed) Albert G. Lauber Judge Served 05/23/24 Bench Opinion by Judge Albert G. Lauber April 17, 2024 3 Deborah Gail Martin v. Commissioner of Internal Revenue Docket No. 7429-22 THE COURT: The Court has decided to render the following as its oral findings of fact and opinion in this case. This bench opinion is made pursuant to the authority granted by section 7459(b) of the Internal Revenue Code and Tax Court Rule 152, and it shall not be relied upon as precedent in any other case. Unless otherwise indicated, statutory references are to the Internal Revenue Code, in effect at all relevant times, regulation references are to the Code of Federal Regulations, in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure. We round all monetary amounts to the nearest 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 dollar. 18 19 20 21 22 23 24 25 This case involves petitioner's 2017 tax year. On December 14, 2021, the Internal Revenue Service (IRS or respondent) issued petitioner a timely notice of deficiency that determined a deficiency of $3,732. This deficiency resulted from the disallowance of a portion of the charitable contribution deduction that she reported on Schedule A, Itemized Deductions, for donations to her church. The sole question for decision concerns the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 correct amount of the deduction to which petitioner is 4 entitled. FINDINGS OF FACT The following facts are drawn from the pleadings, a joint Stipulation of Facts, and the documents admitted into evidence at trial. Petitioner resided in the District of Columbia when she timely filed the Petition. Petitioner is a congregant of United House of Prayer for All People, a church described in section 170(c). We will refer to the Unted House of Prayer for all People as the Church. Petitioner has contributed extremely generously to the Church for many years, making gifts that represent a very substantial portion of her relatively modest income. Petitioner timely filed a Federal income tax return for 2017, reporting a charitable contribution deduction of $36,549 for gifts to the Church. The IRS selected her 2017 return for examination and requested substantiation of the claimed deduction amount. In response petitioner supplied acknowledgement statements from the Church indicating that she contributed $17,957 by check in 2017. The Church provided these acknowledgements pursuant to section 170(f)(8), which provides that no deduction shall be allowed for a charitable gift in excess 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of $250 unless the donee provides "a contemporaneous 5 written acknowledgement of the contribution." Petitioner later supplied bank records to the IRS, confirming that she had made the $17,957 of contributions that the Church had acknowledged. Her bank records also showed that she made $626 in additional contributions to the Church, in amounts that were each less than $250. The IRS timely issued petitioner a notice of deficiency, allowing a charitable contribution deduction of $19,482 for 2017, but disallowing the $17,067 remainder of the deduction she had reported. The disallowance of that portion of the deduction generated the $3,732 tax deficiency at issue. The IRS has not determined any penalty or additions to tax. OPINION The IRS's determinations in a notice of deficiency are generally presumed correct, and the taxpayer bears the burden of proving them erroneous. Rule 142(a). Deductions and credits are a matter of legislative grace, and the taxpayer bears the burden of proving her entitlement to deductions and credits allowed by the Code. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84 (1992). Petitioner does not contend that the burden of proof should shift to respondent under section 7491. She therefore bears the burden of proof on all factual issues. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Section 170(a)(1) allows a deduction for any 6 charitable contribution made within the taxable year to a donee organization described in section 170(c). This deduction is subject to statutory and regulatory substantiation requirements. See § 170(a)(1); Treas. Reg. § 1.170A-13. The specific substantiation requirements depend on the type and size of the contribution. For monetary gifts, the taxpayer must maintain "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." § 170(f)(17). If the amount of any gift is greater than $250, the deduction must be substantiated by a contemporaneous written acknowledgment from the donee organization. See § 170(f)(8); Treas. Reg. § 1.170A-13(f)(1). The acknowledgment must include the amount of cash contributed, whether the donee provided goods or services in exchange for the contributions, and, if the donee provided only intangible religious benefits, a statement to that effect. § 170(f)(8)(B); Treas. Reg. § 1.170A- 21 13(f)(2). 22 23 24 25 Respondent concedes that petitioner has substantiated $18,583 of contributions to the Church during 2017-the sum of $17,957 covered by the acknowledgement letters and $626 of smaller gifts shown in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the bank statements. However, respondent agrees that 7 petitioner is entitled to a larger deduction, in the amount of $19,482, as allowed in the notice of deficiency. Petitioner originally believed that her bank records would show contributions to the Church for 2017 that were larger than this amount. However, when the case was called for trial on April 15, 2024, petitioner agreed that she had made some mistakes in calculating her deduction, and that her bank records did not in fact support a deduction larger than the IRS had allowed. She confirmed her agreement that the amount allowed by the IRS was correct and that she had no evidence to substantiate a larger deduction. In sum, the parties agree that petitioner for 2017 is entitled to a charitable contribution deduction of $19,482 for her gifts to the Church, rather than to a deduction of $36,549 as reported on her return. We accordingly sustain the disallowance of a deduction of $17,067-the difference between those two amounts-as determined in the notice of deficiency. There is no disagreement between the parties that this disallowance generates a tax deficiency of $3,732. Consistent with the foregoing, decision will be entered for respondent for a deficiency of $3,732, but no penalty or additions to tax. This concludes the Court's oral findings of fact and opinion in this case. 8 (Whereupon, at 10:09 a.m., the above-entitled matter was concluded.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25