United States Tax Court Disallowed a $10,000 Charitable Contribution

In 1983, the Universal Life Church (ULC) adopted a "revised receipts and disbursements" program for

In 1983, the Universal Life Church (ULC) adopted a "revised receipts and disbursements" program for amounts received as "charitable contributions."

Under the revised program, donors sent contributions along with a listing of personal debts. When the ULC received such a form with a contribution, it would issue checks payable directly to the donor's creditors. Donors were charged a fee for the service, and claimed a charitable contribution deduction for the amount of their "donation" to the church.

The United States Tax Court recently disallowed a $10,000 charitable contribution made by a donor under this program, concluding that there was no evidence that the "contributed funds" were for the payment of any church-related expenses. The court also assessed a negligence penalty, and awarded $5,000 in damages to the federal government on the basis of the "flagrant and abusive" nature of the program. Svedahl v. Commissioner, 89 T.C. ___ (1987).

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