T.C. Summary Opinion 2010-76
UNITED STATES TAX COURT
EDMUND DOUGLAS ROBERTS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2716-09S. Filed June 17, 2010.
Edmund Douglas Roberts, pro se.
Kimberly A. Kazda, for respondent.
RUWE, Judge: This case was heard pursuant to the provisions
of section 74631 of the Internal Revenue Code in effect when 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.
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, and all Rule references are to the Tax
Court Rules of Practice and Procedure.
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Respondent determined a $10,482.75 deficiency in
petitioner’s 2005 Federal income tax and a $1,670.30 addition to
tax under section 6651(a)(1). After concessions by respondent,2
the issues for decision are: (1) Whether petitioner is entitled
to a charitable contribution deduction of $28,855;3 and (2)
whether petitioner is liable for the addition to tax under
section 6651(a)(1) for failure to timely file his 2005 Federal
income tax return.
Background
Some of the facts have been stipulated and are so found.
The stipulation of facts and the attached exhibits are
incorporated herein by reference. At the time the petition was
filed, petitioner’s mailing address was in California.
Petitioner’s 2005 Federal income tax return was filed in
June 2007, more than 13 months after it was due. For 2005
petitioner claimed, on Schedule A, Itemized Deductions, a $200
cash charitable contribution, which he described as donations to
panhandlers and the Salvation Army, and $28,655 of noncash
2
Respondent initially disallowed a $1,843 deduction for
local taxes paid and a $16,092 deduction for real estate taxes.
By stipulation respondent concedes that petitioner is entitled to
these deductions.
3
On line 18 of the 2005 Schedule A, Itemized Deductions,
petitioner claimed a charitable contribution deduction of
$30,655. However, this figure appears to be a miscalculation
since its components consist of claimed cash gifts of $200 and
noncash gifts of $28,655. Thus, the correct total gifts to
charity claimed by petitioner is $28,855.
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charitable contributions. Included with his 2005 Federal income
tax return was a self-prepared substitute Form 8283, Noncash
Charitable Contributions, in which petitioner claims to have
contributed more than 450 items of property consisting primarily
of used clothing, but also including, among other things, towels,
bedsheets, books, costume jewelry, children’s toys, and glass
lamps. Petitioner’s descriptions of the items of property
allegedly contributed to charity are vague and include self-
assigned estimates of their values. Petitioner also provided
copies of five receipts from Goodwill Industries (Goodwill) dated
January 9, April 13, May 18, September 16, and October 1, 2005.
Only one of the receipts bears a signature indicating that the
donated items were received by Goodwill, and the receipts provide
nothing more than vague references to the items allegedly
donated; e.g., “men’s boots”, “ladies’ clothes”, “men’s clothes”,
“boy’s clothes”, “women’s clothing”, and “4 bags of clothes”.
On October 29, 2008, respondent issued a notice of
deficiency to petitioner determining a deficiency of $10,482.75
and an addition to tax of $1,670.30 under section 6651(a)(1).
The deficiency is based on disallowed itemized deductions.
Respondent’s determination to disallow petitioner’s claimed
charitable contribution deduction was generally based on
respondent’s assertion that petitioner had failed to adequately
substantiate the items claimed as charitable contributions.
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Discussion
The Commissioner’s determinations in a notice of deficiency
are presumed correct, and the taxpayer bears the burden of
proving error in the Commissioner’s determinations. Rule 142(a);
Welch v. Helvering, 290 U.S. 111, 115 (1933). The burden of
proof may shift to the Commissioner in certain circumstances if
the taxpayer introduces credible evidence and establishes that he
substantiated items, maintained required records, and fully
cooperated with the Commissioner’s reasonable requests. Sec.
7491(a)(1) and (2)(A) and (B). Petitioner has neither asserted
that the burden of proof has shifted to respondent nor provided
adequate substantiation of the alleged charitable contributions
claimed on his 2005 Federal income tax return; therefore, the
burden of proof remains with petitioner.
Deductions are a matter of legislative grace, and the
taxpayer bears the burden of proving he is entitled to the
deductions claimed. Rule 142(a); INDOPCO, Inc. v. Commissioner,
503 U.S. 79, 84 (1992); New Colonial Ice Co. v. Helvering, 292
U.S. 435, 440 (1934). A taxpayer must substantiate amounts
claimed as deductions by maintaining the records necessary to
establish that he is entitled to the deductions. Sec. 6001; sec.
1.6001-1(a), Income Tax Regs.
In general, section 170(a) allows as a deduction any
charitable contribution the payment of which is made within the
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taxable year. Deductions for charitable contributions are
allowable only if verified under regulations prescribed by the
Secretary. Sec. 170(a)(1); Hewitt v. Commissioner, 109 T.C. 258,
261 (1997), affd. without published opinion 166 F.3d 332 (4th
Cir. 1998).
Cash Charitable Contributions
A cash contribution to charity made on or before August 17,
2006, in an amount less than $250 may be substantiated with a
canceled check, a receipt, or other reliable evidence showing the
name of the donee, the date of the contribution, and the amount
of the contribution.4 Alami El Moujahid v. Commissioner, T.C.
Memo. 2009-42; sec. 1.170A-13(a)(1), Income Tax Regs.
With respect to the claimed $200 of cash contributions to
charity, petitioner has failed to offer anything more than his
self-serving testimony that he made various donations to
panhandlers and the Salvation Army. The Court need not accept a
taxpayer’s self-serving testimony when the taxpayer fails to
present corroborative evidence. Tokarski v. Commissioner, 87
T.C. 74, 77 (1986). Petitioner did not offer any canceled
4
There are now stricter requirements for cash contributions
to charity. Sec. 170(f)(17). No deduction for a contribution of
money in any amount is allowed unless the donor maintains a bank
record or written communication from the donee showing the name
of the donee organization, the date of the contribution, and the
amount of the contribution. Id. This new provision is effective
for contributions made after Aug. 17, 2006. Pension Protection
Act of 2006, Pub. L. 109-280, sec. 1217, 120 Stat. 1080.
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checks, receipts, or other reliable evidence to substantiate the
claimed $200 of cash contributions to charity. Accordingly, we
sustain respondent’s determination to deny to petitioner a
deduction for the claimed $200 of cash contributions to charity.
Noncash Charitable Contributions
For charitable contributions made in property other than
cash, the value of the contribution is generally the fair market
value at the time of contribution. Hewitt v. Commissioner, supra
at 261; sec. 1.170A-1(c)(1), Income Tax Regs. The fair market
value of the property contributed is the price at which the
property would change hands between a willing buyer and a willing
seller, neither being under any compulsion to buy or sell and
both having reasonable knowledge of relevant facts. Sec. 1.170A-
1(c)(2), Income Tax Regs.
Generally, for noncash charitable contributions of property,
a taxpayer must maintain for each contribution a receipt from the
donee showing the name of the donee, the date and location of the
contribution, and a description of the property in detail
reasonably sufficient under the circumstance. Sec. 1.170A-
13(b)(1), Income Tax Regs. The rules are modified, however, for
a contribution of an item of property where the amount claimed or
reported as a deduction under section 170 with respect to such
item exceeds $5,000. Sec. 1.170A-13(c)(1)(i), Income Tax Regs.
In this respect an item of property is the aggregate amount
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claimed or reported as a deduction for a charitable contribution
under section 170 for such items of property and all similar
items of property by the same donor for the same taxable year
(whether or not donated to the same donee). Id. The phrase
“similar items of property” means property of the same generic
category or type, such as clothing, toys, and jewelry. Sec.
1.170A-13(c)(7)(iii), Income Tax Regs. A donor who claims or
reports a charitable contribution deduction for an item of
property that exceeds $5,000 in value generally must obtain a
qualified appraisal for the contributed property, attach a fully
completed appraisal summary to his tax return on which the
deduction for the contribution is first claimed (or reported) by
the donor, and maintain records containing, inter alia, the name
and address of the donee organization, the date and location of
the contribution, a description of the property in detail
reasonable under the circumstances, and the fair market value of
the property at the time the contribution was made, including the
method used in determining the fair market value. Sec. 1.170A-
13(c)(2), Income Tax Regs.; see also sec. 1.170A-13(b)(2)(ii),
Income Tax Regs.
The receipts and the self-prepared substitute Form 8283 that
petitioner submitted to substantiate the noncash charitable
contributions do not meet the statutory requirements.
Petitioner’s substitute Form 8283 does not indicate the dates on
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which the items were allegedly contributed to charity, nor does
it indicate the identity of any donee organization. Moreover,
petitioner has neither attached to his Federal income tax return
nor proffered an appraisal summary to establish the values of the
items allegedly donated. In fact, when asked how he determined
the values of the items reported on his substitute Form 8283,
petitioner responded:
That’s determined by looking at going shopping, looking
at the ads when I purchase clothes, cutting it as by
some value depending upon the wear. When my children
were young I would buy the, you know, I’d buy my
daughter a brand-new dress and she’d wear it two or
three times and grow out of it. So it’d still have a
lot of value in it. So it depends upon the condition
of the materials, an estimate.
Furthermore, the copies of the five receipts from Goodwill
neither reconcile with petitioner’s substitute Form 8283 nor
provide anything more than vague descriptions of the items
donated. Accordingly, we find that petitioner has failed to
establish, by proper and adequate substantiation, entitlement to
a charitable contribution deduction for the noncash items he
claims to have donated to charity. We therefore sustain
respondent’s determination to deny petitioner a deduction for
noncash contributions to charity.
Section 6651(a)(1) Addition to Tax
Section 6651(a)(1) imposes an addition to tax for the
failure to file a return on the date prescribed therefor
(determined with regard to any extension of time for filing),
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unless it is shown that such failure is due to reasonable cause
and not due to willful neglect. Section 7491(c) generally
provides that the Commissioner bears the burden of production
with respect to the liability of an individual for any penalty or
addition to tax. The Commissioner may meet his burden of
production by coming forward with sufficient evidence indicating
that it is appropriate to impose the relevant penalty. Higbee v.
Commissioner, 116 T.C. 438, 446 (2001).
Petitioner filed his 2005 Federal income tax return more
than 13 months after its due date. Petitioner has neither
offered any explanation for the tardiness of his 2005 Federal
income tax return nor established that he had been granted an
extension of time to file. Thus, not only has respondent met his
burden of production with respect to the addition to tax under
section 6651(a)(1), but also petitioner has failed to establish
that his late-filed 2005 Federal income tax return was due to
reasonable cause and not due to willful neglect. Accordingly, we
sustain the section 6651(a)(1) addition to tax but note that the
section 6651(a)(1) addition to tax computation must be adjusted
to reflect respondent’s concessions.
To reflect the foregoing,
Decision will be entered
under Rule 155.