Opinion ID: 157391
Heading Depth: 3
Heading Rank: 3

Heading: Deduction for Charitable Contributions

Text: 45 The Estate next contends that the settlement payment was in essence a deductible charitable contribution under I.R.C. § 2055, because it saved the Foundation (a charitable organization) substantial litigation costs. Section 2055(a)(2) allows a deduction for transfers to or for the use of certain charitable organizations. 9 The Estate argues that had the Buell descendants proceeded with their tort claims, the Foundation could have been liable for the tortious acts of Foundation representatives. Instead, the Foundation approved the settlement payment out of Buell Trust money that would otherwise have passed to the Foundation under the terms of the Buell Trust instruments. Therefore, the Estate reasons, it is as though the Buell Trust made a deductible contribution of $2.27 million to the Foundation, which in turn paid the Buell descendants for release of their claims. 46 The plain language of the statute precludes this creative argument. The payment was not made to or for the use of the Foundation; it was made to the Buell descendants, to use any way they saw fit. Any benefit to the Foundation was incidental. Again, a transaction is to be given its tax effect in accord with what actually occurred and not in accord with what might have occurred. National Alfalfa, 417 U.S. at 148, 94 S.Ct. 2129. What actually occurred here was a payment to the Buell descendants, not to the Foundation. 47