Tax Court Denies Deduction for a Member’s Contributions to His Church

A tax court denied a church member’s charitable contribution deductions to his church for lack of substantial information.  The church member claimed that his bank savings account register was proof that he made charitable contributions because it showed these withdrawals.  The court denied these deductions because the name of the charity must be shown on the reliable written record and the taxpayer did not list the name of the church or these withdrawals (only dates and amounts). The register did not show the dates and amounts of the alleged contributions. The taxpayer also claimed that most of his contribution deductions were “carryovers” from previous years (that he had not deducted in prior years). While in some cases, a taxpayer who contributes more than can be deducted in one year may be able to “carryover” the excess to the next year.  This option was not available to the taxpayer in this case since he failed to show that any amounts qualified as charitable contributions in prior years. 

Estimating Charitable Contributions

A taxpayer claimed charitable contribution deductions of a certain amount in one year. The IRS denied the deductions on the basis of insufficient substantial information. The taxpayer attempted to provide an estimate of a portion of these contributions by multiplying an approximate number of times he attended church each year by his average weekly contribution (but the taxpayer was uncertain of even this estimate). In certain circumstances, taxpayers may estimate the number of their charitable contributions if they provide a sufficient basis to estimate the amount of the contributions (such as showing regular church attendance and regular cash contributions). The court concluded that the taxpayer failed to establish any regularity in occurrence or extent of the donations from which to estimate an amount or to present any reliable evidence indicating he actually made these or other contributions; therefore he was not entitled to any deduction.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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