No Contribution Deduction for Church School Tuition

Court rejects argument that tuition resulted in an “intangible religious benefit.”

A federal appeals court rejected a married couple's claim that they could deduct 55% of the cost of their son's tuition at a religious school since religious instruction comprised 55% of the curriculum and constituted an "intangible religious benefit" that did not reduce the value of their charitable contribution.

The court concluded, "Not only has the Supreme Court held that, generally, a payment for which one receives consideration does not constitute a contribution or gift … but it has explicitly rejected the contention … that there is an exception for payments for which one receives only religious benefits in return."

The parents also argued that they could claim a charitable contribution deduction for the amount by which their tuition payments exceeded the market value of their son's education. They claimed that the value of the education their son received was zero since the cost of an education at a public school was "free," and therefore they could fully deduct the cost of their son's tuition since the entire amount exceeded the "value" of the education received.

The court disagreed, noting that the value of their son's education was the cost of a comparable secular education offered by private schools. Further, the court noted that the parents presented no evidence of the tuition that private schools charge for a comparable secular education, and so there was no evidence showing that they made an "excess payment" that might qualify for a tax deduction.

Sklar v. Commissioner,2002-1 USTC 50,210 (9th Cir. 2002)

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