Gomez Case TC Summary Opinion 2008-93

[BulldogTom]

This case has to do with charitable contributions and substantiation. Looks like the IRS is truly going to get tough. I wish I knew how to post an acrobat attachment.

What really has me interested is the tax court said they believed the taxpayer, believed the charity, and the taxpayer had all the cancelled checks. But because the receipt letter from the church was not provided prior to the taxpayer filing the return, and the letter did not have the required language concerning no goods or services provided in exchange for the donation, the tax court sided with the IRS and the taxpayer lost 6K in charitable deductions.

I am planning to highlight this case to all my clients this year in my annual letter.

Tom

Lodi, CA

[RoyDaleOne]

Trying to attach file.

Gomez3.SUM.WPD_1_.pdf

[BulldogTom]

How did you do that?

Tom

Lodi, CA

[jainen]

>>the letter did not have the required language<<

The taxpayer's church, the Apostolic Assembly of the Faith in Christ Jesus, believes that God is "inconceivable in His way of being, and indescribable in essence." So how is anyone supposed to get a danged receipt?

[MAMalody]

<<<So how is anyone supposed to get a danged receipt? >>>

By asking, if necessary.

[Eric]

How did you do that?

Tom

Lodi, CA

Under the box where you write your post, there is a section called "Attachment Editor"

Using the controls on the right, browse to the file you wish to attach and hit the Upload button. This puts your file into your attachment space, which is like a library of the files you've uploaded. Once your file is in your attachment space, you can use the drop-down-box on the right labeled "Manage Current Attachments" to insert a link to the file into your post, or to delete a previously uploaded attachment.

[BulldogTom]

Gomez_Case.pdf

Trying this out. Sorry for the duplicate post of the document.

Thanks Eric

Tom

Lodi, CA

[BulldogTom]

Does anyone else find this case troubling? It seems to me that the IRS has gone too far. I understand that many taxpayers have taken advantage of the charitable contribution rules in the past and congress wanted to tighten up enforcement, but when a judge says "I believe you made these contributions and they are for charitable purposes", shouldn't that be enough to justify the deduction? We are not talking about a transaction that can be cast in various forms to produce different tax results (ie like kind exchanges, installment sales). We are talking about a factual situation. Did the taxpayer give cash to a valid charity? It seems to me that if the taxpayer can prove that point, the deduction should stand, regardless of the wording on a letter.

I am having a hard time with the logic on this one. I also understand that it is not precedent for other cases, but if the IRS is going to enforce this rule in this manner, and the court is going to uphold the rule, there are going to be alot of unhappy clients in the future. An auditor would be silly not to look for the documentation on that deduction immediately if there are any other issues on the return.

Tom

Lodi, CA

[RoyDaleOne]

This is the problem, right out of the CODE.

(8) Substantiation requirement for certain contributions

(A) General rule

No deduction shall be allowed under subsection (a) for any

contribution of $250 or more unless the taxpayer substantiates

the contribution by a contemporaneous written acknowledgment of

the contribution by the donee organization that meets the

requirements of subparagraph (.

( Content of acknowledgement

An acknowledgement meets the requirements of this

subparagraph if it includes the following information:

(i) The amount of cash and a description (but not value) of

any property other than cash contributed.

(ii) Whether the donee organization provided any goods or

services in consideration, in whole or in part, for any

property described in clause (i).

(iii) A description and good faith estimate of the value of

any goods or services referred to in clause (ii) or, if such

goods or services consist solely of intangible religious

benefits, a statement to that effect.

For purposes of this subparagraph, the term ''intangible

religious benefit'' means any intangible religious benefit

which is provided by an organization organized exclusively for

religious purposes and which generally is not sold in a

commercial transaction outside the donative context.

© Contemporaneous

For purposes of subparagraph (A), an acknowledgment shall be

considered to be contemporaneous if the taxpayer obtains the

acknowledgment on or before the earlier of -

(i) the date on which the taxpayer files a return for the

taxable year in which the contribution was made, or

(ii) the due date (including extensions) for filing such

return.

[RoyDaleOne]

Bulldog, lol, old dog, new tricks.

[MAMalody]

While I don't really like it, the part I really don't like is the fact that if you file on 1 March and receive your documentation on 2 March it is not allowable. I would accept it easier if they simply indicated it must be received by the due date of the return or 15 October if the return is filed under extension.

[RoyDaleOne]

It says or on the date, that is April 15, etc.

[zeke]

It says or on the date, that is April 15, etc.

on or before the earlier of -

(i) the date on which the taxpayer files a return for the

taxable year in which the contribution was made, or

(ii) the due date (including extensions) for filing such

return.

[RoyDaleOne]

It has been forever that if you file your return before 4/15/xx it was deemed to be filed for most purposes on the due date of 4/15/xx. I see the "new" wording, and will check on it later. It may be a change, nothing else is going in the taxpayer favor.

[joanmcq]

I lost a case because of the wording of a reciept; the lack of the 'no goods or services' line on a payroll deduction when the taxpayer had the paystub, had the acknowledgement, but the acknowledgement didn't have the requisite phrasing. No doubt as to the donation, no doubt as to the recipient organizations (it was like a united way payroll thing, where several organizations got donations, but wasn't united way) and all were disallowed.

[MAMalody]

It has been forever that if you file your return before 4/15/xx it was deemed to be filed for most purposes on the due date of 4/15/xx. I see the "new" wording, and will check on it later. It may be a change, nothing else is going in the taxpayer favor.

What I have normally read is "considered to be timely filed" which is different than "for most pourposes on the due date of 4/15/XXXX. On the surface, an objective reading would make my example correct.