Court Opinion

ID: 4337482
Source: CourtListenerOpinion
Date Created: 2018-11-14 03:23:49.336271+00
Date Added: 2024-06-11T14:48:28.650835
License: Public Domain

T.C. Summary Opinion 2009-30

                     UNITED STATES TAX COURT

         GREGORY A. AND TERRI L. MADDUX, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

     Docket No. 8072-08S.               Filed March 4, 2009.

     Gregory A. and Terri L. Maddux, pro sese.

     Douglas S. Polsky, for respondent.

     ARMEN, Special Trial Judge:   This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect when the petition was filed.1   Pursuant to section

7463(b), the decision to be entered is not reviewable by any

     1
        Unless otherwise indicated, all subsequent section
references are to the Internal Revenue Code in effect for 2005,
the taxable year at issue, and all Rule references are to the Tax
Court Rules of Practice and Procedure. All monetary amounts are
rounded to the nearest dollar.
                                - 2 -

other court, and this opinion shall not be treated as precedent

for any other case.

     Respondent determined a deficiency of $2,502 in petitioners’

Federal income tax for 2005.    The deficiency is attributable to

respondent’s disallowance of petitioners’ claimed charitable

contribution carryover of $10,000 arising from charitable

contributions made in 2002.

     After concessions by respondent,2 the sole issue for

decision is whether petitioners are eligible for a charitable

contribution carryover beyond that which has already been

conceded by respondent.    Because we agree that petitioners were

not eligible for any additional charitable contribution carryover

from 2002 in 2005, we hold for respondent.

                              Background

     Some of the facts have been stipulated, and they are so

found.    We incorporate by reference the parties’ stipulation of

facts and accompanying exhibits.

     At the time the petition was filed, petitioners resided in

the State of Kansas.

     Petitioners were regular and generous contributors to their

church.    In 2002, petitioners donated $122,214.   In 2003, they

     2
        Although the notice of deficiency disallowed the entire
$10,000 claimed charitable contribution carryover from 2002 to
2005, respondent later conceded that petitioners were eligible
for $1,944 of the carryover.
                               - 3 -

donated $33,155.   In 2004, they donated $16,995.     In 2005, they

donated $35,920.

     In 2004, the Internal Revenue Service selected petitioners’

2002 return for an audit examination.      Petitioners’ 2002

charitable contributions were substantiated and it was determined

that petitioners had a charitable contribution carryover of

$61,150.   Petitioners did not amend their already-filed 2003

return to claim any part of the carryover amount they were

eligible for in that year.

     When they filed their 2004 Federal income tax return,

petitioners reported charitable contributions of $16,995 and

claimed a carryover of $17,033 from 2002.

     In 2005, petitioners reported charitable contributions of

$35,920.   They also claimed a charitable contribution carryover

of $10,000 from 2002.   Respondent disallowed the $10,000

deduction and sent petitioners a notice of deficiency.

Respondent subsequently conceded that petitioners were entitled

to a carryover of $1,944 from 2002 to 2005.

                             Discussion3

     Section 170(a) allows a deduction for charitable

contributions made within the taxable year.      As relevant here,

section 170(d)(1) provides that if the amount of a charitable

     3
        The issue for decision is essentially legal in nature;
accordingly, we decide it without regard to the burden of proof.
                                 - 4 -

contribution made to a church exceeds 50 percent of the

taxpayer’s “contribution base” for that year,4 any excess

contribution is to be treated as a charitable contribution paid

in each of the 5 succeeding taxable years in order of time,

according to a formula.5   See sec. 170(d)(1)(A) (emphasis added);

see also sec. 170(b)(1)(A); sec. 1.170A-10(b), Income Tax Regs.

The regulations clarify that the carryover provisions and

limitations apply even if a taxpayer elects the standard

deduction in a given tax year.    See sec. 63; sec. 1.170A-

     4
        A taxpayer’s contribution base is the taxpayer’s adjusted
gross income calculated without regard to any net operating loss
carryback under sec. 172. Sec. 170(b)(1)(G).
     5
        Sec. 170(d)(1)(A) requires that the carryover
contribution amount be the lesser of:

          (i) the amount by which 50 percent of the taxpayer’s
     contribution base for such succeeding taxable year
     exceeds the sum of the charitable contributions
     described in subsection (b)(1)(A) payment of which is
     made by the taxpayer within such succeeding taxable
     year (determined without regard to this subparagraph)
     and the charitable contributions described in
     subsection (b)(1)(A) payment of which was made in
     taxable years before the contribution year which are
     treated under this subparagraph as having been paid
     in such succeeding taxable year; or

         (ii) in the case of the first succeeding taxable
     year, the amount of such excess, and in the case of
     the second, third, fourth, or fifth succeeding taxable
     year, the portion of such excess not treated under
     this subparagraph as a charitable contribution described
     in subsection (b)(1)(A) paid in any taxable year
     intervening between the contribution year and such
     succeeding taxable year.
                               - 5 -

10(a)(2), Income Tax Regs.   In other words, the carryover is good

for the 5 years immediately following the charitable deduction,

and some portion of the deduction expires each year whether it is

actually used or not.6

     In this case, petitioners do not otherwise dispute

respondent’s computation (expressed in his concessions) of the

$1,944.   Rather, petitioners’ central argument is that they

should not be limited to $1,944 and may use the carryover credit

as they see fit as long as they do so within the allowable time

period following the original charitable contribution.

Specifically, petitioners argue that they should be permitted to

deduct $10,000 of the charitable contribution carryover in 2005.

The plain language of the statute and the applicable regulations

dictates otherwise.

     Petitioners argue that the IRS did not tell them that they

needed to amend any already-filed returns to take full advantage

of their charitable contribution carryover.   In this regard,

petitioners argue that the rules regarding charitable

contribution deductions and related carryovers are confusing, and

thus they (i.e., petitioners) should be permitted to deduct their

     6
        For a concise explanation of the mechanics of the
carryover, see, e.g., Charitable Contributions: Income Tax
Aspects, 521-3rd Tax Mgmt. (BNA), A-139 through A-140 (May 13,
2008) and the examples illustrated therein.
                                - 6 -

contribution carryover amounts in ways not contemplated by the

statute and the accompanying regulations.

     However intricate the rules may be, taxpayers are permitted

deductions only as a matter of legislative grace, and then only

as specifically provided by statute.    INDOPCO, Inc. v.

Commissioner, 503 U.S. 79, 84 (1992).    See generally Cheek v.

United States, 498 U.S. 192, 199-200 (1991); Marsh & McLennan

Cos. v. United States, 302 F.3d 1369, 1381 (Fed. Cir. 2002);

Phila. & Reading Corp. v. United States, 944 F.2d 1063, 1074 (3d

Cir. 1991).    And under the rules applicable to charitable

contribution carryovers, petitioners were eligible, in 2005, for

a carryover of only $1,944, and not $10,000.

     Petitioners also urge us to suspend the running of the

period of limitations as to tax years 2003 and 2004 to permit

them the opportunity to amend their income tax returns for those

years.7   Mr. Maddux, a certified public accountant, could have

gone back and filed an amended return for 2003 after he received

the adjustments from his 2002 audit in June 2004; he chose not to

do so.    To grant petitioners’ request is beyond the purview of

this Court.    The Tax Court is a court of limited jurisdiction,

and we may exercise that jurisdiction only to the extent

     7
        Sec. 6511 provides that taxpayers must file a claim for a
refund within 3 years from the time the return was filed or 2
years from the time the tax was paid, whichever expires later.
Petitioners’ right to file a claim for a refund expired for 2003
on Apr. 15, 2007, and for 2004 on Apr. 15, 2008.
                               - 7 -

expressly authorized by Congress.   See, e.g., Naftel v.

Commissioner, 85 T.C. 527, 529 (1985).     We have no authority to

suspend or adjust the period of limitations imposed by the

Internal Revenue Code to suit petitioners’ convenience.

     To the extent petitioners have made other arguments, those

arguments are without merit.   Therefore, and for the reasons

discussed above, we hold that petitioners are entitled only to a

charitable contribution carryover of only $1,944 from 2002 to

2005, and, accordingly

                                       Decision will be entered under

                               Rule 155.