Tax Court Denies Deduction for a Member’s Contributions to Church

Court ruled church member failed to prove his contributions.

A church member (“John”) claimed that he made charitable contributions of cash and property in the amounts of $37,000, $25,000, and $32,000 to his church in 1994, 1995, and 1996. The IRS audited John, and denied any deductions for charitable contributions during the three years under examination on the basis John’s failure to substantiate any of his alleged contributions. John appealed to the Tax Court, claiming that he could deduct his cash contributions (each of which was less than $250) without any documentary proof. The court disagreed:

[A taxpayer] must substantiate the date, amount, and donee of charitable contributions of money with: (a) a canceled check; (b) a receipt from the donee organization; or (c) in the absence of a canceled check or receipt, other reliable written records …. A taxpayer with no canceled checks or receipts must verify charitable contributions with other reliable written records showing the name of the donee, the date, and the amount of the contribution. Factors showing whether a document (other than check or receipt) is adequate to substantiate a charitable gift include the contemporaneous nature of the writing, the regularity of the recordkeeping, and, for small contributions, the existence of any written document or other evidence from the donee organization which shows that it received the gift even if it is not a receipt; e.g., a button, emblem, or other token regularly given by the organization to a donor. [John] made no contributions by check and had no receipts for any cash contributions during the years in issue. He testified that he sometimes contributed cash anonymously so that a recipient could not identify him as the donor.

John claimed that his bank savings account register proved that he made charitable contributions of $7,500 in 1995 and $7,810 in 1996 because it showed withdrawals in these amounts. The court disagreed. It noted that the name of the charity must be shown on the reliable written record and that John did not list the name of the church for the withdrawals of $7,500 for 1995 and $7,810 for 1996. While the register showed the dates and amounts of the withdrawals, it did not show the dates and amounts of the alleged contributions.

The court also rejected John’s claim that most of his contribution deductions were “carryovers” from contributions that he had made, but not deducted, in prior years. John claimed that he made charitable contributions from 1977 to 1993 totaling more than $40,000 which he did not deduct on any tax return, and that the deductions he claimed in 1994-1996 were carryovers of these earlier contributions. While in some cases a taxpayer who contributes more than can be deducted in one year may be able to “carry over” the excess to the next year, this option was not available to John since he “failed to show that any amounts qualified as charitable contributions in prior years, or that any excess charitable contributions existed from prior years that were available to be carried over to 1994, 1995, and 1996.”

Jennings v. Commissioner, T.C. Memo. 2000-366 (2000)

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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