T.C. Summary Opinion 2007-93
UNITED STATES TAX COURT
PAUL CHRISTOPHER AND KANDL LEI ROBINSON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 23305-05S. Filed June 11, 2007.
Paul Christopher and Kandl Lei Robinson, pro sese.
C. Teddy Li, for respondent.
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7463 of the Internal
Revenue Code in effect at the time the petition was filed.
Pursuant to section 7463(b), the decision to be entered is not
reviewable by any other court, and this opinion shall not be
treated as precedent for any other case. Unless otherwise
indicated, subsequent section references are to the Internal
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Revenue Code in effect for the years in issue, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Respondent determined deficiencies in petitioners’ 2002 and
2003 Federal income taxes of $2,928 and $2,139, respectively.
After concessions,1 the issue for decision is whether petitioners
are entitled to charitable contribution deductions.
Some of the facts have been stipulated and are so found.
The stipulation of facts and attached exhibits, as well as an
additional exhibit introduced at trial, are incorporated herein
by this reference. At the time the petition was filed,
petitioners resided in Clarksville, Maryland.
Petitioners timely filed joint 2002 and 2003 Federal income
tax returns. On their 2002 return, petitioners reported adjusted
gross income of $79,864 and claimed a $20,900 deduction for cash
contributions. On their 2003 return, petitioners reported
adjusted gross income of $72,937 and claimed a $20,511 deduction
for cash contributions.2 Respondent issued petitioners a notice
of deficiency in September 2005 disallowing $19,400 of the
deductions claimed for 2002 and $19,011 of the deductions claimed
1
For 2002, respondent concedes that petitioners are
entitled to expense deductions claimed on Schedule E,
Supplemental Income and Loss.
2
Petitioners also claimed $2,650 in noncash contributions
on their 2003 return. Respondent allowed this noncash
contribution deduction, and therefore it is not at issue.
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for 2003. Thus, the notice of deficiency allowed $1,500 as a
cash contribution deduction for each of the years in issue.
In general, the Commissioner’s determinations set forth in a
notice of deficiency are presumed correct, and the taxpayer bears
the burden of proving that these determinations are in error.
Rule 142(a); Welch v. Helvering, 290 U.S. 111, 115 (1933).
Pursuant to section 7491(a), the burden of proof as to factual
matters shifts to the Commissioner under certain circumstances.
Petitioners have neither alleged that section 7491(a) applies nor
established their compliance with the requirements of section
7491(a)(2)(A) and (B) to substantiate items, maintain records,
and cooperate fully with respondent’s reasonable requests.
Petitioners therefore bear the burden of proof.
Deductions are a matter of legislative grace, and the
taxpayer bears the burden of proving that he is entitled to any
deduction claimed. INDOPCO, Inc. v. Commissioner, 503 U.S. 79,
84 (1992); New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440
(1934). Section 170(a) allows as a deduction any charitable
contribution made within the taxable year. Deductions for
charitable contributions are allowable only if verified under the
regulations prescribed by the Secretary. Sec. 170(a)(1). In
general, the regulations require the taxpayer to maintain for
each contribution of money one of the following: (1) A canceled
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check; (2) a receipt from the donee;3 or (3) in the absence of a
check or receipt, other reliable written records.4 Sec. 1.170A-
13(a)(1), Income Tax Regs. The taxpayer must establish the
reliability of the written records. Sec. 1.170A-13(a)(2)(i),
Income Tax Regs. Any contribution of $250 or more shall not be
allowed unless the taxpayer substantiates the contribution by a
contemporaneous written acknowledgement of the contribution by
the donee organization.5 Sec. 170(f)(8).
Petitioners contend they made substantial charitable cash
contributions in 2002 and 2003 with money they received from
refinancing their house and gifts they received from family.
Aside from minimal receipts and written acknowledgments of
contributions, petitioners did not provide any canceled checks or
other written records of their claimed contributions. In this
connection, the record is unclear as to the basis of respondent’s
allowance of deductions for cash contributions for each of the
years in issue.
3
A receipt should include the name of the donee, the date
of the contribution, and the amount of the contribution. Sec.
1.170A-13(a)(1)(ii), Income Tax Regs.
4
A reliable written record should include the name of the
donee, the date of the contribution, and the amount of the
contribution. Sec. 1.170A-13(a)(1)(iii), Income Tax Regs.
5
The written acknowledgement must state the amount of cash
and a description (but not necessarily the value) of any property
other than cash the taxpayer donated and whether any
consideration was given to the taxpayer. Sec. 1.170A-13(f)(2),
Income Tax Regs.
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When a taxpayer establishes that he has incurred a
deductible expense but is unable to substantiate the exact
amount, we are generally permitted to estimate the deductible
amount. Cohan v. Commissioner, 39 F.2d 540, 543-544 (2d Cir.
1930). To apply the Cohan rule, however, the Court must have a
reasonable basis upon which an estimate can be made. Vanicek v.
Commissioner, 85 T.C. 731, 742-743 (1985). Based on all of the
facts and circumstances, we do not accept petitioners’ testimony
as a reasonable basis for estimating additional deductions. We
therefore limit additional deductions to those that petitioners
specifically documented.
For tax year 2002, petitioners provided a letter from Turner
Construction (Paul Robinson’s employer) confirming a $50
contribution made to the University of Maryland College Park
Foundation under the company’s gift-matching program,6 and a
receipt for a $7 donation to Habitat for Humanity. Based on this
substantiation, respondent’s determination on this issue is
sustained except that petitioners are entitled to an additional
$57 deduction above the $1,500 allowed by respondent for 2002.
For tax year 2003, petitioners provided a receipt for a $52
contribution to the Leukemia and Lymphoma Society. They also
6
Petitioners also provided a letter from the University of
Maryland dated May 15, 2003, acknowledging a $25 contribution
made by petitioners in 2002, but the letter from Turner dated
June 24, 2003, acknowledging $50 in contributions appears to be
inclusive of that amount.
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provided an acknowledgment of a $2,100 contribution to the
Colesville Council of Community Congregations. It is not clear
whether the purported contribution was cash or noncash, since the
receipt indicates that $2,100 is the “value according to donor”.
As noted supra note 2, petitioners claimed a $2,650 deduction for
noncash contributions, which was allowed, and is not at issue.
Petitioners did not provide a copy of the Form 8283, Noncash
Charitable Contributions, showing that the $2,100 contribution
has not already been allowed, and they have otherwise failed to
meet the substantiation requirements for a contribution greater
than $250. Based on the foregoing, respondent’s determination is
sustained except that petitioners are entitled to an additional
$52 deduction above the $1,500 respondent allowed for cash
charitable contributions for 2003.
Petitioners have otherwise failed to substantiate the
remaining claimed contribution deductions for either year.
To reflect the foregoing,
Decision will be entered
under Rule 155.