T.C. Summary Opinion 2010-141
UNITED STATES TAX COURT
MARIA ELENA TOWELL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8002-09S. Filed September 21, 2010.
Maria Elena Towell, pro se.
Mark J. Tober, for respondent.
WELLS, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
when the petition was filed.1 Pursuant to section 7463(b), the
1
All section references are to the Internal Revenue Code
(Code) in effect for the year in issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated. All amounts are rounded to the nearest
dollar.
- 2 -
decision to be entered is not reviewable by any other court, and
this opinion shall not be treated as precedent for any other
case.
Respondent determined a deficiency in petitioner’s 2006
Federal income tax of $1,995. The issues that remain for
decision are: (1) Whether petitioner is entitled to a deduction
pursuant to section 170(a)(1) for a claimed $423 cash charitable
contribution; and (2) whether petitioner is entitled to a
deduction pursuant to section 170(a)(1) for a claimed $12,900
noncash charitable contribution.
Background
Some of the facts and certain exhibits have been stipulated.
The stipulations of fact are incorporated in this opinion by
reference and are found accordingly.
At the time the petition was filed, petitioner resided in
Florida.
Petitioner purchased a timeshare interest (timeshare) for
$12,396 from Westgate Miami Beach, Ltd. (Westgate), on May 20,
2001.2 Petitioner executed a mortgage agreement with Westgate
for the purchase of her timeshare. On October 12, 2004,
2
A timeshare interest represents an individual’s interest in
a jointly owned or rented property (such as a vacation
condominium) which is shared by several persons who take turns
occupying the property. Black’s Law Dictionary 1492 (7th ed.
1999).
- 3 -
petitioner made full payment and satisfaction of the mortgage
with Westgate.
During 2006, petitioner donated her timeshare to Tracets
Foundation (Tracets). Tracets, which claims to be a section
501(c)(3) foundation,3 is dedicated to preserving lakes and
streams for future generations. Tracets “partnered” with
Wholesale Timeshare Services and eMidsouth, Inc., to coordinate
the transfer of the timeshare from petitioner.
On November 30, 2006, petitioner signed a general warranty
deed transferring ownership of her timeshare to eMidsouth, Inc.
Petitioner did not have an appraisal of the value of the
timeshare made when it was transferred. Petitioner attached Form
8283, Noncash Charitable Contributions, to her return for tax
year 2006. On Form 8283, in the section for donated property of
$5,000 or less, petitioner listed the donation of her timeshare
3
Respondent does not challenge whether Tracets meets the
definition of an organization to which a contribution is eligible
for a charitable deduction. Sec. 170(c). Accordingly, we deem
that issue conceded.
Because of respondent’s concession, an estimate of the
allowable deduction could be made. See Cohan v. Commissioner, 39
F.2d 540, 543-544 (2d Cir. 1930). The Court has not definitively
decided whether Cohan is available to estimate charitable
contributions. See Kendrix v. Commissioner, T.C. Memo. 2006-9
(finding that the Court has not yet squarely addressed the
inherent conflict between sec. 170(a)(1) and the application of
Cohan to unverified or inadequately substantiated charitable
contributions). However, because petitioner presented no
evidence on the value of the timeshare, there is no basis on
which to estimate an allowable amount.
- 4 -
to Tracets, stated that it had a fair market value of $12,900,
and stated that an appraisal was used to determine the fair
market value.
Discussion
Deductions are a matter of legislative grace, and taxpayers
bear the burden of proving that they are entitled to the
deductions claimed. See 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).4
Section 170(a)(1) provides: “There shall be allowed as a
deduction any charitable contribution * * * payment of which is
made within the taxable year. A charitable contribution shall be
allowable as a deduction only if verified under regulations
prescribed by the Secretary.” Generally, contributions of money
(cash, check, or other monetary gift), can be substantiated by
either a canceled check, a receipt, or other reliable written
records.5 Sec. 1.170A-13(a)(1), Income Tax Regs. Additionally,
4
Petitioner has not raised any issue regarding sec. 7491(a);
and because she has failed to substantiate her claims or
introduce credible evidence for any of the issues, sec. 7491(a)
does not apply. See sec. 7491(a)(1) and (2)(A).
5
For contributions of money in any amount made during tax
years beginning after Aug. 17, 2006, taxpayers are required to
maintain a bank record or a written communication from the donee
showing the name of the donee organization, the date of the
contribution, and the amount of the contribution. Sec.
170(f)(17). There is no de minimis exception to the
recordkeeping requirement. Sec. 170(f)(17); see also sec.
(continued...)
- 5 -
for contributions of $250 or more, deductions are not allowed
unless the taxpayer substantiates the contribution by a
contemporaneous written acknowledgment by the donee
organization.6 Sec. 170(f)(8)(A). The written acknowledgment
must include:
(i) the amount of cash and a description (but not
value) of any property other than cash contributed.
(ii) whether the donee organization provided any goods
or services in consideration, in whole or in part, for any
property described in clause (i).
(iii) a description and good faith estimate of the
value of any goods or services referred to in clause (ii)
or, if such goods or services consist solely of intangible
religious benefits, a statement to that effect.
Sec. 170(f)(8)(B). To be considered contemporaneous, the written
acknowledgment must be obtained by the taxpayer before the
earlier of the due date of the return, including extensions, or
the filing of the return. Sec. 170(f)(8)(C).
Petitioner failed to give testimony or offer documentary
evidence regarding her cash contribution. Accordingly, we
5
(...continued)
1.170A-15(a), Proposed Income Tax Regs., 73 Fed. Reg. 45908,
45914 (Aug. 7, 2008). However, this section does not apply
because petitioner’s tax year began on Jan. 1, 2006.
6
Separate contributions of less than $250 are not subject to
the requirements of sec. 170(f)(8), regardless of whether the sum
of the contributions made by a taxpayer to a donee organization
during a taxable year equals $250 or more. See sec. 1.170A-
13(f)(1), Income Tax Regs.
- 6 -
sustain respondent’s denial of petitioner’s claimed deduction for
a cash charitable contribution of $423.
Charitable contributions greater than $500 are subject to
heightened substantiation requirements. Sec. 170(f)(11)(A)(i).
For noncash contributions greater than $5,000, a deduction is
allowed if a taxpayer: “obtains a qualified appraisal of such
property and attaches to the return for the taxable year in which
such contribution is made such information regarding such
property and such appraisal as the Secretary may require.”
Sec. 170(f)(11)(C). Section 170(f)(11) was added to the Code
pursuant to the American Jobs Creation Act of 2004, Pub. L. 108-
357, sec. 883, 118 Stat. 1631, to codify the substantiation
requirements previously addressed in the regulations and applies
to contributions made after June 3, 2004. Smith v. Commissioner,
T.C. Memo. 2007-368, affd. 364 Fed. Appx. 317 (9th Cir. 2009). A
qualified appraisal is conducted by a qualified appraiser in
accordance with generally acceptable appraisal standards and is
treated as a qualified appraisal under the regulations and other
guidance provided by the Secretary.7 Sec. 170(f)(11)(E).
7
Sec. 170(f)(11)(E) was amended by the Pension Protection
Act of 2006, Pub. L. 109-280, sec. 1219(c)(1), 120 Stat. 1085.
As amended, sec. 170(f)(11)(E) codifies the definition of
qualified appraisals and appraisers and is effective generally
for appraisals prepared with respect to returns or submissions
filed after Aug. 17, 2006. Id. sec. 1219(e). As petitioner’s
return was filed after Aug. 17, 2006, the amended sec.
170(f)(11)(E) applies.
- 7 -
However, a deduction will not be denied if the failure to meet
the requirements of section 170(f)(11)(A)(i) is due to reasonable
cause and not willful neglect. Sec. 170(f)(11)(A)(ii)(II).
Petitioner failed to provide evidence of any appraisal of
her timeshare. Petitioner testified that she never received an
appraisal from Westgate upon the purchase of her timeshare in
2001. Regulations issued before the addition of section
170(f)(11) required the qualified appraisal to be made not
earlier than 60 days before the date of contribution and before
the due date of the original return, plus extensions, on which
the contribution is first claimed, or in the case of an amended
return, the filing date. Sec. 1.170A-13(c)(3)(i)(A), Income Tax
Regs. On October 19, 2006, the Internal Revenue Service issued
transitional guidance to provide a safe harbor for taxpayers in
conjunction with new section 170(f)(11)(E). Notice 2006-96,
2006-2 C.B. 902. The transitional guidance provides that the
requirements of section 1.170A-13(c), Income Tax Regs., that are
consistent with section 170(f)(11) still apply, including the
time limits. Id. Regardless of whether she received an
appraisal from Westgate in 2001, petitioner never obtained a
qualified appraisal of her timeshare in conjunction with her 2006
contribution to Tracets. See sec. 170(f)(11)(C). Moreover,
petitioner did not offer any reason for her failure to obtain a
qualified appraisal; therefore, petitioner has not proved that
- 8 -
her failure to meet the requirements of section 170(f)(11) was
due to reasonable cause and not willful neglect. Accordingly, we
sustain respondent’s denial of petitioner’s claimed deduction for
a noncash charitable contribution of $12,900.
We have considered all of the contentions and arguments of
the parties that are not discussed herein, and we conclude they
are without merit, irrelevant, or moot.
To reflect the foregoing,
Decision will be entered
for respondent.