Court Opinion

ID: 4479830
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:13:53.334203+00
Date Added: 2024-06-11T07:57:25.837077
License: Public Domain

Atkins, J., concurring: I concur in the result reached in this case for the reasons set forth hereinafter. Section 170(a) (1) of the Internal Eevenue Code of 1954 provides for the deduction of any charitable contribution payment of which is made within the taxable year. It seems clear from the legislative history of this provision that Congress intended to require actual payment as a prerequisite to the deduction of a charitable contribution. The general rule has always been that, under the cash method of accounting, there must be actual payment as a prerequisite to a deduction, that is, there must be an outlay of cash or property, and that the giving of a promissory note does not constitute actual payment. See Echert v. Burnet, 283 U.S. 140; Helvering v. Price, 309 U.S. 409; and Baltimore Dairy Lunch v. United States, (C.A. 8) 231 F. 2d 870. It was the purpose of Congress, in enacting section 23 (o) and (q) of the Eevenue Act of 1938 (which first employed the language now appearing in section 170(a)(1) of the 1954 Code), to put accrual method taxpayers in the same position, insofar as deductions for contributions are concerned, as cash method taxpayers, and to require in the case of either type of taxpayer that the contribution be actually paid. In H. Rept. No. 1860, 75th Cong., 3d Sess., p. 19, it was stated: Under the various revenue acts the deduction for contributions is allowed for the taxable year in which the contribution is made. Hence, a taxpayer on an accrual basis of accounting may claim that he is entitled to a deduction for the amount of a charitable pledge in one year, although he does not actually pay it until a later year, or indefinitely postpones payment. The doubt and confusion in such cases is aggravated by reason of the uncertainty and diversity in the law of the various States on the question as to when the liability of a subscriber to a charitable fund is fully incurred. In the interest of certainty in the administration of the revenue laws, it is desirable to dispel this confusion by enacting a clear and uniform statutory rule to govern this situation. The bill provides that the deduction for contributions or gifts for charitable and other purposes shall be allowed only for the taxable year in which the contribution is actually paid regardless of whether the taxpayer is reporting income on the cash or the accrual basis. The allowance of the deduction in the year when actually paid, will provide a clearer rule without hardship to the taxpayer and will eliminate the uncertainty in the administration of the deduction. * * * [Emphasis supplied.] Thus, it is clear tfiat Congress intended that in no case should the time of deductibility of a contribution depend upon the time that the liability for payment might be fully incurred under the law of a particular State. The income tax regulations since the passage of the Eevenue Act of 1938 have consistently required that a charitable contribution be actually paid as a prerequisite to a deduction, regardless of the taxpayer’s method of accounting. Sec. 19 (o)-1, Eegs. 103, and sec. 1.170-1 (a), Income Tax Eegs. Here the petitioner did not make actual payment in the taxable year in question. Although the promissory note which he gave in the year in question was a demand promissory note, it nevertheless was merely a promise to pay, as distinguished from actual payment. The giving of the note was not the equivalent of the giving of a check, the latter being an order to pay and hence considered payment as distinguished from a promise to pay. See Estate of Modie J. Spiegel, 12 T.C. 524. Accordingly, it seems to me that the petitioner cannot be considered as having made payment of a contribution within the taxable year in question, within the meaning of this statute, and therefore is not entitled to the claimed deduction. Opper, Naum, Bruce, Tradst, Dawson, and Hoyt, JJ., agree with this concurring opinion.