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Tax Court Addresses Gifts of Property

With proper substantiation, gifts of property can be tax deductible.

A taxpayer (Jerry) claimed a charitable contribution deduction of $3,700 on his federal tax return based on property that he allegedly donated to a church-affiliated children's home. He claimed that he purchased a number of items which he then gave directly to the home. As substantiation for these contributions, he provided a list with the various items along with the prices that he paid for them. No individual item cost more than $90. He also provided a letter from the charity acknowledging the receipt of "new gym shoes, sweaters, boots, and food supplies". The items on his list, primarily consisting of children's athletic shoes, corresponded to this description.

The IRS audited Jerry's tax return, and denied the $3,700 charitable contribution deduction. It asserted that Jerry failed to produce adequate documentation for these alleged donations of property, such as receipts for the new shoes ...

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Posted:
  • February 2, 2004

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