Recent Developments

Issues that affect ministers and churches
Substantiating Charitable Contributions
Key point. Charitable contribution deductions for contributions of noncash property are subject to various substantiation requirements. Failure to comply with these requirements can result in a loss of any deduction even if there is no doubt that a contribution was made.

The United States Tax Court disallowed a married couple's $37,315 charitable contribution deduction for lack of proper substantiation. On Schedule A, Itemized Deductions, of their 2011 federal income tax return, a married couple (the "taxpayers") claimed a charitable contribution deduction of $37,315 for noncash charitable contributions, which the IRS disallowed in its entirety.

The taxpayers contend that they donated property during 2011 to four charitable organizations: the Upper Dublin Lutheran Church (Church), Goodwill Industries (Goodwill), the Military Order of the Purple Heart Service Foundation (Purple Heart), and Vietnam Veterans of America (Vietnam Veterans). The taxpayers' noncash contributions to the Church consisted of items they allegedly donated to its 2011 annual flea market. These items included books valued at $8,000, household items valued at $1,303, clothing valued at $1,000, toys valued at $822, telescopes valued at $800, jewelry valued at $780, and household furniture valued at $410, for a total of $13,115.

The taxpayers did not produce a receipt or an acknowledgment from the Church for their donations of any of these items. The Church was evidently equipped to provide such receipts, because petitioners claimed to have a receipt from the Church for their contributions to the 2012 flea market. The taxpayers produced no evidence, such as photographs, that any of the listed items were actually delivered to the Church. The Church did not inform the taxpayers whether any of the items allegedly contributed were sold or at what price.

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