Legal Document

495 U.S. 472 110 S.Ct. 2014 109 L.Ed.2d 457 Harold DAVIS, et ux., Petitionersv.UNITED STATES. No. 89-98. Argued March 26, 1990. Decided May 21, Syllabus Section 170 of the Internal Revenue Code 1954 permits a taxpayer to claim charitable contribution deduction only if is made "to or for use of" qualified organization. Petitioner husband and wife, who are members Church Jesus Christ Latter-day Saints (Church) claimed such deductions funds transferred their sons while they were serving as full-time, unpaid missionaries Church. The requested payments, set amounts, and, through written guidelines, instructed that be used exclusively missionary work. In accordance with petitioners' money primarily pay rent, food, transportation, personal needs on missions. When Service denied claim, filed suit in District Court. court ruled favor Government, holding payments not "for under § because lacked sufficient possession control funds. also rejected alternative deductible Treas.Reg. 1.170A-1(g)—which allows "unreimbursed expenditures incident rendition services an organization contributions which deductible" ground petitioners themselves performing donated services. Court Appeals affirmed. Held: 1. by within meaning 170. Pp. 478-486. (a) choosing phrase of," Congress was most likely referring donations legally enforceable trust similar legal arrangement. Although, its face, quoted could support any number meanings, history statute indicates added 1921 purpose overruling Government's prior interpretation gift deductible. Construing arrangement comports accepted "use" synonymous term "trust." 479-482. (b) Thus, Service's contemporaneous longstanding intended convey "in for" consistent statutory language, fully implements Congress' apparent adopting it, must accepted. 482-484. (c) There no evidence contentions interpreted fiduciary relationships general type relationship gives reasonable ability supervise contributed 484-485. (d) record does finding for," similarly benefit of, took steps normally associated creating arrangement; had obligation comply promise Church's guidelines; might have entitlement civil cause action against using purposes approved 485-486. 2. transfer "to" 1.170A-1(g). regulation's plain language taxpayers may expenditures" incurred connection own "rendition [a qualified] organization." 486-489. 861 F.2d 558 (CA9 1988), O'CONNOR, J., delivered opinion unanimous Rex E. Lee, Washington, D.C., petitioners. Shirley D. Peterson, Hartford, Conn., respondent. Justice O'CONNOR 1 We called upon this case determine whether two served Church, pursuant 26 U.S.C. (1982 ed.). 2 * Petitioners, Enid Davis, sons, Benjamin Cecil, According stipulated facts, operates worldwide program involving 25,000 persons each year. Most these young men between ages 19 22. If determines candidate become missionary, president sends letter calling service specified geographical location. A follow-up from department lists items clothing will need, provides specific information relating mission, sets forth estimated amount needed service. This varies according location reflects estimate actually need. 3 missionary's parents generally provide necessary son daughter during period unable do so, locate another donor local congregation believes having individual donors send directly benefits several important ways. Specifically, it "fosters doctrine sacrifice consecration lives people" well reducing administrative bookkeeping requirements would otherwise imposed App. Pet. Cert. 32a. 4 After accepting call, receives priesthood ordinances serve official minister During service, mission (leader mission) controls many aspects missionaries' lives, including manner dress grooming. Missionaries required conform daily schedule calls at least 10 hours per day actual work addition study time, mealtime, planning time. Mission rules forbid dating, movies, plays, certain sports, other activities; allowed take vacations travel purposes. 5 receive some supervision over Missionary Handbook instructs "[t]he you your sacred should spent wisely Keep expenses minimum. . financial all expenditures." 13. presidents give instructions supervision. Although obtain advance approval expenditure make checking account, submit weekly reports group leader listing time accomplished, report total week month date. begins accumulate surplus funds, he expected reduce sent him. alter his estimates amounts into account changing circumstances. 6 Cecil Davis both applied missionaries. 1979, notified been New York Mission. second informed him 1980, Zealand-Cook Island received informing about Petitioners bishop meet sons' expenses. petitioners, commitment them instructions. 7 Benjamin's sole authorized signatory, $3,480.89 1980 $4,135 1981. 1981, $1,518 Cecil's signatory. approximately $20 purchase religious tracts materials Neither nor seek sought account. However, submitted At end remaining account; $150 camera. (Petitioners amount.) 8 joint tax returns dependents, but did On April 16, 1984, amended income return years claiming additional $4,882 paid January 1985, disallowed refunds. refund United States Idaho. September 1986, returns, limiting indicated correcting dependents 9 Court, moved summary judgment. 664 F.Supp. 468 (Idaho 1987). argued Alternatively, 1.170A-1(g), CFR 1.170A-1(g) (1989), deductible." States. It unreimbursed services, held F.Supp., 471-472. Ninth Circuit (1988). conferred Id., 561. Instead, when recipient charity exercises 562. reasoned beneficiary indefinite, see Russell v. Allen, 107 163, 167, 327, 330, 27 L.Ed. 397 (1883), requirement cannot met makes beneficiary. case, concluded disposition thus F.2d, agreed apply regulation performed 564. 11 Because Appeals' decision conflicted White States, 725 1269, 1270-1272 (CA10 1984), Brinley Commissioner, 782 1326, 1336 (CA5 1986), we granted certiorari, 493 953, 362, 349 (1990), now affirm. II 12 Under 1954, 68A Stat. 58, amended, ed.), section provides, pertinent part: 13 "(a) Allowance deduction. 14 "(1) General rule.—There shall (as defined subsection (c)) payment taxable allowable verified regulations prescribed Secretary. 15 16 "(c) Charitable defined.—For section, 'charitable contribution' means of— 17 18 "(2) corporation, trust, community chest, fund, foundation— 20 "(B) organized operated religious, charitable, scientific, literary, educational ." (Emphasis added.) 21 contend accounts Treasury Regulation therefore Church.* first consider issue here 22 different meanings. See, e.g., Webster's International Dictionary (2d ed. 1950) ("use" usage convert one's service"; employ"; or, law, "use imports trust" relationship). given broadest describing "the entire array one person conveys property someone else hold employ third person." Brief 17. reading, need exist donee; effect, intermediary handle way arguably organization, regardless how indirect tangential be. second, somewhat narrower interpretation, specifically so long donee has "a ensure serves organization's purposes." 26. argue interpretation. They point role requesting setting donated, requiring expense sheets Service, hand, historically conveying 'in for.' " I.T. 1867, II-2 Cum.Bull. 155 (1923). 23 either events leading enactment amendment adding indicate mind. original version 170, promulgated War Act 1917, ch. 63, 1201(2), 40 allow gifts donee. Rather, individuals deduct "[c]ontributions corporations associations interpreting provision (and subsequent 1918, 18, 214(a)(11), 1068), Bureau stated company (a corporation) invest disburse [§ 170]." O.D. 669, 187 (1920). hearings before Senate Committee Finance proposed 1921, representatives foundations making companies donees even though trustee, rather than title Hearings Proposed Finance, 67th Cong., 1st Sess., 521 (1921). Testimony numerous communities established trusts, foundations, chests donate trustee held, invested, reinvested principal, then turned principal committee distributed 522-526; H.R.Rep. 350, (1921) (House Comm. Ways Means) (amendments "would deduction, proper restriction, chest fund foundation"); S.Rep. 275, Responding concerns, overruled Bureau's (then 214(a)(11)) foundation 136, 42 241. light events, can inferred related amending allowing donees. An goal. 24 quite natural intent suggested Congress. From dawn English common law present, word employed refer various forms arrangements. See G. Bogert, Trusts Trustees 2, p. (1935); Black's Law 1382 (5th 1979) ("Uses trusts much things same subject. regards principally beneficial interest; nominal ownership"). early part century, technically passive less formally synonym supra, ("The words 'use' 'trust' synonyms frequently writers judges"); R. Baldes, Perry 298 (7th 1929) ("A use, confidence thing. ."); Restatement §§ 67-72 (Effect Statute Uses) (1935). phrases Bowling, 256 484, 486, 41 561, 562, 65 1054 (1921); Blanset Cardin, 319, 321, 519, 520, 950 Rand 249 503, 508, 39 359, 360, 63 731 (1919). Given precisely corresponded statute, appears 25 understanding confirmed initial phrase. significant almost immediately following Commissioner "intended Rejecting taxpayer's volunteer fire municipality, noted "[i]t appear municipality incorporated voice used. Upon dissolution company, escheat State. right appropriation enjoyment rest municipality." Ibid. adhered for' rulings permitting value irrevocably organizations. Rev.Rul. 55-275, 1955-1 295; 194, 1953-2 128; 3707, 1945 114. Numerous judicial decisions relied Rockefeller 676 35, (CA2 1982); Orr 343 553, 557-558 1965); Thomason T.C. 441, 444 (1943); Danz 454, 464 (1952), aff'd grounds, 231 673 1955), cert. denied, 352 828, 77 43, 50 (1956). reenactment satisfaction prevailing statute. Cammarano 358 498, 510, 79 524, 531, 462 (1959); McCaughn Hershey Chocolate Co., 283 488, 492-493, 51 512, 75 1183 (1931). Commissioner's entirely faithful Moreover, whole. enacting "Congress organizations, encourage development private institutions useful public supplement place kind." Bob Jones University 461 574, 588, 103 2017, 2026, 76 157 (1983). assures fact foster requires defining characteristic power enforce trustee's duty terms trust. W. Fratcher, Scott 200 (4th 1988); bona fide incentive authority properly contributes range organizations single terms, enforced Attorney laws 4A 391 1989); Bogert 411 1977). require contribution, nevertheless rights respect degree res redundant, more "to." disagree. aware ruling Accordingly, overcome immediate control, donation charity. Unlike go discretion select among whom disbursed. Bowman B.T.A. 1157, 1163-1164 (1929). Furthermore, receipt delayed. Recognizing further 1964 order charity, "often find operating philanthropic endeavors extended periods time." 830, 88th 2d 59-60 (1964). 28 interpretive force effect regulations, Bartels Birmingham, 332 126, 132, 67 1547, 1550, 91 1947 (1947), agency's interpretations practices considerable weight where involve construction use. Norwegian Nitrogen Products Co. 288 294, 315, 53 358, 796 (1933). circumstances presented here, think there good reason accept of." denial prompted amend "trust," constitute strong 29 bear failed establish compelled language. To contrary, above, indications meaning. tend undermine children relatives face virtually insurmountable difficulties verifying particular benefited Cf. 170(a)(1). suggestion whatsoever improper purpose, clear create opportunity evasion others eager exploit. Scialabba, Kurtzman, & Steinhart, Mail-Order Ministries Contribution Deduction: First Amendment Restrictions, Minister's Burden Proof, Effect TRA '86, Campbell L.Rev. (1988); Note, "I Know I It": Ministry Tax Fraud Problem Constitutionally Acceptable Definition Religion, Am.Crim.L.Rev. 113 (1987). permissible decided adopt note retain flexibility future. decide it. conclude 30 Viewing favorable after grant judgment discern undisputed bank signatories. Nothing promised guidelines," 36a, so; guidelines binding effect. Nor assertion, Tr. Oral Arg. 19-20, parents' that, III 31 contend, alternative, provides: 32 "Contributions No contribution. For example, cost uniform without utility worn Similarly, out-of-pocket transportation necessarily Reasonable meals lodging away home course paragraph, 'while home' 162 thereunder." 33 assert charities. Unless ordinarily takes deductions. Culbertson, 337 733, 739-740, 69 1210, 1212-1213, 93 1659 (1949) ("[T]he principle taxation [is] taxed earns it"); Colonial Ice Helvering, 292 435, 440-441, 54 788, 790-791, 78 1348 (1934) ("[T]axpayer sustain[s] loss allowed"). naturally read taxpayer, those Ruling precursor 55-4, 291 gratuitously association, 170] incurs traveling computing net ."). strain suggest, party's clearly subject provisions regulation. home, party home. 34 Petitioners' strains manipulation Does Charity Begin Home? Status Payment Individual Deduction, 83 Mich.L.Rev. 1428, 1434-1435 (1985); 1338 (Hill, J. dissenting). tempted greater reimburse donating Parents attempt expenditure. Controlling abuses heavy burden monitor records, correlate records party. extent lessens likelihood inconsistent 35 cite parties assisted rendering McCollum 37 T.C.M. 1817 (1978); Smith 60 988 (1973). These cases inapposite, independently sons. 36 taxpayers' Therefore, entitled agents efforts, argument neither raised Appeals, decline address here. Delta Air Lines, Inc. August, 450 346, 101 1146, 1155, 287 (1981); Mendenhall, 446 544, 551-552, n. 5, 100 1870, 1875,, 64 497 (1980). 38 Affirmed. adopted 1982), 84-61, 1984-1 40.

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