Jennings v. Commissioner

T.C. Memo. 2000-366

UNITED STATES TAX COURT

STANLEY JOSEPH JENNINGS, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8249-98. Filed December 4, 2000.

Stanley Joseph Jennings, pro se.

Robert D. Kaiser, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

COLVIN, Judge: Respondent determined deficiencies in

petitioner’s Federal income taxes of $4,982 for 1994, $4,314 for

1995, and $4,381 for 1996, and accuracy-related penalties under

section 6662(a) of $994.80 for 1994, $862.80 for 1995, and

$876.20 for 1996.

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Petitioner contends that he made charitable gifts of cash,

property, and articles to be published. Following concessions,1

the issues for decision are:

1. Whether petitioner is entitled to deduct charitable

contributions of $36,960.30 for 1994, $25,028.40 for 1995, and

$32,522.32 for 1996, as he contends, zero as respondent contends,

or some other amount. We hold that he may not deduct any

charitable contributions for the years in issue.

2. Whether petitioner is liable for the accuracy-related

penalties under section 6662(a). We hold that he is.

Section references are to the Internal Revenue Code in

effect during the years in issue. Rule references are to the Tax

Court Rules of Practice and Procedure.

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

Petitioner lived in Lima, Ohio, when the petition was filed. He

worked for the Ford Motor Co. in the years in issue.

1

Petitioner concedes that he may not deduct amounts that

he paid for a banquet for his parents, gasoline, dental care,

lawn care, household repairs, and maintenance. In the notice of

deficiency, respondent disallowed petitioner’s $2,000 IRA

contribution for 1996. Petitioner offered no evidence and makes

no argument on this issue. Thus, petitioner has conceded this

issue. See, e.g., Bradley v. Commissioner, 100 T.C. 367, 370

(1993); Sundstrand Corp. v. Commissioner, 96 T.C. 226, 344

(1991); Rybak v. Commissioner, 91 T.C. 524, 566 n.19 (1988);

Money v. Commissioner, 89 T.C. 46, 48 (1987); Leahy v.

Commissioner, 87 T.C. 56, 73-74 (1986).

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A. Petitioner’s Contributions

Petitioner’s father was a minister.

Petitioner was the organist for the Grace Apostolic Church

in Lima in 1989. On November 30, 1989 (before the years in

issue), petitioner paid $1,700 to buy a speaker for the organ in

that church. He donated the speaker to the church on a date not

specified in the record.

Petitioner did not attend church during the years in issue.

Petitioner deposited $4,690.50 at Bank One in Lima, Ohio, on

March 8, 1995, to open a savings account (Bank One account). He

wrote in an account register the date and amount of his deposits,

the date and amount of his withdrawals, and some of the

recipients or uses of his withdrawals from the Bank One account

for 1995 and 1996. The amounts and dates of deposits and

withdrawals that petitioner wrote in the account register

corresponded to Bank One deposit and withdrawal receipts for 1995

and 1996. Petitioner wrote dates, descriptions, and amounts of

his withdrawals in 1995 and 1996 in the account register as

follows:

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Date Description Amount

1995

12 May Withdrawal $400

19 May Withdrawal/Tithes Gift 100

16 June Withdrawal/Tithes Gift 300

27 June Withdrawal/Gift B/D Contr. 300

7 July Withdrawal/Tithe Sis. B/D Gift 400

14 July Withdrawal 200

28 July Gift/Withdrawal Bradfield Building Fund 1,000

14 Sept Tithe/Withdrawal World Challenge 800

2 Oct Withdrawal - Tithes 1,000

30 Oct Withdrawal - Contr. 1,000

1 Dec Withdrawal - Tithes Gift 1,000

28 Dec Withdrawal - Tithes contr./gift 1,000

7,500

1996

10 Jan Withdrawal - Gift 1,000

2 Feb Withdrawal/Tithes Gift 1,000

3 Apr Withdrawal 110

4 Apr Tithes/Withdrawal – M-BD Gift 500

26 Apr Withdrawal/Gift 500

3 May Gift/Withdrawal World Challenge 500

10 May Withdrawal 100

4 Jun Contr/Withdrawal Gift 1,000

5 July Tithes/Withdrawal Gift 700

17 July Withdrawal 150

5 Aug Withdrawal B B/D Gift 200

6 Sept Contr/Withdrawal Lou Gehrig’s Assoc. 800

6 Sept Withdrawal 400

21 Nov Tithes/Withdrawal Amer. Canc. Assoc. 700

25 Nov Withdrawal/Tithes 150

7,810

Petitioner wrote articles on inspirational, self-help, and

similar topics and gave them to Topaz, Inc. (Topaz), which is

located in Grand Rapids, Michigan. Topaz published petitioners’

articles in the Afro-American Gazette, the African American

Magazine, and Take Pride! Community newspaper. Petitioner did

not seek or accept compensation for the articles he gave to

Topaz. Petitioner spent $154.81 to mail copies of the Afro-

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American Gazette, the African American Magazine, and Take Pride!

Community newspaper to organizations (which are not identified in

the record) in Lima and Findlay, Ohio, in 1995.

B. Petitioner’s Income Tax Returns for 1994, 1995, and 1996

Petitioner called his local office of the Internal Revenue

Service (IRS) and spoke to Marlene A. Bunten (Bunten), an IRS

problem resolution officer, sometime between 1990 and 1995.

Bunten told petitioner that he could deduct charitable

contributions on Schedule A of his income tax returns, that

instructions for claiming the deduction were in the booklet that

the IRS provides with his return, and that he would be required

to prove his contributions. Petitioner told Bunten: “Well, I’m

going to try anyway and see what happens.”

On a date not specified in the record, petitioner wrote on a

3" by 3" paper “Tithes/(illegible word) $6074.00 1989 Tabernacle

of God” (the 3" by 3" paper).

Petitioner deducted the following amounts as charitable

contributions for 1994, 1995, and 1996:

Description 1994 1995 1996

Cash or check2 $2,860.00 $1,418.00 $8,011.62

Other than cash or check 0.00 0.00 0.00

Carryover from prior year 34,100.30 23,610.40 24,510.70

Total charitable 36,960.30 25,028.40 32,522.32

contribution

2

The Schedules A for the years in issue contain the phrase

“cash or check”. However, none of petitioner’s contributions

were by check.

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OPINION

A. Charitable Deductions

Petitioner contends that he may deduct charitable

contributions in the amounts of $36,960.30 for 1994, $25,028.40

for 1995, and $32,522.32 for 1996. Respondent contends that

petitioner may not deduct any of those amounts. We agree with

respondent primarily because petitioner has not substantiated the

contributions as required by section 170(a)(1) (taxpayer must

verify claimed contribution under regulations prescribed by the

Secretary) and section 1.170A-13(a)(1), Income Tax Regs., and

secondarily because he has not shown that he made contributions

to organizations described in section 170(c).

1. Cash Contributions During the Years in Issue

Petitioner contends that he may deduct charitable gifts of

cash without any documentary proof. We disagree. Petitioner

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. See sec.

1.170A-13(a)(1), Income Tax Regs.; see also Coffman v.

Commissioner, T.C. Memo. 2000-7; Thorpe v. Commissioner, T.C.

Memo. 1998-123.

Petitioner made no contributions by check and had no

receipts for any cash contributions during the years in issue.

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He testified that he sometimes contributed cash anonymously so

that a recipient could not identify him as the donor.

Petitioner points out that Schedule A refers to charitable

gifts by “cash or check” and contends that this means that he may

deduct cash contributions in the amounts he claims. We disagree.

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. See sec. 1.170A-13(a)(1)(iii), Income Tax Regs.

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. See sec. 1.170A-13(a)(2)(i),

Income Tax Regs.

Petitioner contends that he may use the 3" by 3" paper and

his account register to verify his charitable contributions.

There is no evidence showing when petitioner prepared the 3" by

3" paper.3 Petitioner contends that he wrote the information on

3

On brief, petitioner contends that he prepared the 3" by

3" paper after he spoke to Bunten. There is no evidence that

petitioner spoke to her in 1989.

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the 3" by 3" paper after he telephoned the church. However,

there is no evidence about when petitioner telephoned the church

or to whom he spoke. Thus, petitioner has not shown that his

preparation of the 3" by 3" paper was contemporaneous or part of

a regular recordkeeping procedure. See sec. 1.170A-

13(a)(2)(i)(A) and (B), Income Tax Regs. The 3" by 3" paper does

not establish that petitioner made a charitable contribution of

$6,074.

Petitioner contends that his account register establishes

that he made charitable contributions of $7,500 in 1995 and

$7,810 in 1996. We disagree. Section 1.170A-13(a)(1)(iii),

Income Tax Regs., requires that the name of the donee be shown on

the reliable written record. Petitioner did not list the names

of the donees for withdrawals of $7,500 for 1995 and $7,810 for

1996. He also testified that he contributed unspecified amounts

of cash to what he said was the Lou Gehrig’s Disease Association

through the wife of his former pastor in Chicago because his

former pastor had contracted Lou Gehrig’s disease. He also

testified that he contributed an unspecified amount of cash to

his neighbor who gave it to the American Cancer Society.4

4

Petitioner testified that he contributed to the American

Cancer Society which is listed in IRS Publication 78. However,

petitioner has no record showing that he made a contribution to

the American Cancer Society. He did not testify when or how much

he gave to the American Cancer Society.

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Petitioner did not testify when he made those gifts. He has no

records or receipts for these contributions.

He listed as donees the Bradfield Building Fund ($1,000 in

1995), World Challenge ($800 in 1995 and $500 in 1996), Lou

Gehrig’s Disease Association ($800 in 1996), and American Cancer

Association ($700 in 1996) as donees. The register shows the

dates and amounts of the withdrawals, but not the dates and

amounts of contributions.

Petitioner must show that the donees are organizations

described in section 170(c). See sec. 170(a)(1). None of the

organizations petitioner named were listed in IRS Publication 78,

“Cumulative List of Organizations described in Section 170(c) of

the Internal Revenue Code of 1986"5 during the years in issue.

Petitioner did not show that the Bradfield Building Fund, World

5

Publication 78, "Cumulative List of Organizations

described in Section 170(c) of the Internal Revenue Code of

1986", contains a list of organizations with outstanding rulings

or determination letters holding that contributions to these

organizations are deductible. The list is not all-inclusive. If

an organization is not listed but has received a determination

letter from the IRS, contributors are generally permitted to

deduct their donations. However, if an organization has not

received such a letter, contributors are not permitted to deduct

their donations, unless it is an organization described in sec.

170(c)(1); i.e., a State, a possession of the United States, or

any political subdivision of the foregoing, or the United States

or the District of Columbia.

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Challenge, Lou Gehrig’s Disease Association,6 and American Cancer

Association are organizations described in section 170(c).

We have allowed charitable deductions for contributions made

after 1982 (when section 1.170A-13(a) and (b), Income Tax Regs.,

applies) where certain facts were present such as contributions

to churches which clearly qualify under section 170(c)(2), direct

contributions from the taxpayers to the churches, and regular

attendance at and giving to the churches. See, e.g., Fontanilla

v. Commissioner, T.C. Memo. 1999-156; Meeks v. Commissioner, T.C.

Memo. 1998-109; Drake v. Commissioner, T.C. Memo. 1997-487.

Those facts are not present here.

We conclude that petitioner may not deduct any of his

claimed cash contributions for the years in issue.

2. Contribution of Articles and Postage

Petitioner contends that he may deduct an unspecified amount

for articles and $154.81 for postage during the years in issue as

a contribution to Topaz. He contends that Topaz is an

organization described in section 170(c)(2). Topaz was not

listed in IRS Publication 78 for the years in issue. Petitioner

believed that Topaz was a charitable organization because it

donated the proceeds from the sale of its magazines and

6

Amyotrophic Lateral Sclerosis Association, an

organization that helps to find a cure for Lou Gehrig’s disease,

is listed in IRS Publication 78. However, petitioner has not

shown that he made contributions to that organization.

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newspapers to the American Negro College Fund and provided other

scholarships and grants. That does not convince us that Topaz is

an organization described in section 170(c)(2).

Petitioner points out that he gave respondent the telephone

number for Topaz’s chief executive officer and contends that

respondent should have verified Topaz’s status. We disagree.

Petitioner bears the burden of proof. See Rule 142(a).

To be eligible for a charitable deduction for the articles,

petitioner must, among other requirements, establish the fair

market value of the articles at the time of the contribution and

show the method he used to estimate the value. See sec. 1.170A-

13(b)(2)(ii), Income Tax Regs. Petitioner did not offer any

evidence of the fair market value of the articles. Petitioner

said that Topaz’s chief executive officer offered to pay him the

going rate, but he did not say how much that was. We conclude

that petitioner may not deduct any amount for the articles that

he gave to Topaz in the years in issue.

3. Excess Charitable Contributions Carried Over From Prior

Years

Petitioner testified that he made charitable contributions

from 1977 to 1993 totaling more than $40,000 which he did not

deduct on any of the tax returns he filed before his 1994 return.

He deducted $34,100.30 in 1994, $23,610.40 in 1995, and

$24,510.70 in 1996 as excess charitable contributions carried

over from prior years.

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Petitioner testified that he believes he has contributed

more than $40,000 since 1977. The only specific gift that he

identified is the speaker for the organ he donated to the church.

Petitioner had a receipt for the speaker that he bought on

November 30, 1989. However, the receipt does not show that he

contributed it or, if he did, when he contributed it. He did not

identify any other specific gifts, donees, dates, or amounts, or

offer any other evidence substantiating his charitable

contributions before 1994.

Petitioner did not 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. See sec.

170(d). We conclude that petitioner may not deduct any

charitable contributions carried over from prior years.

4. Conclusion

We conclude that petitioner may not deduct any amount as

charitable contributions for 1994, 1995, or 1996, or excess

charitable contributions carried over to 1994, 1995, or 1996.

B. Accuracy-Related Penalties for Negligence and Substantial

Understatement of Tax

Petitioner contends that he was not negligent because he

sought advice from Bunten. We disagree. Bunten told petitioner

that he was required to substantiate charitable deductions.

Petitioner deducted the amounts without having adequate

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substantiation. Petitioner makes no other argument that he is

not liable for the accuracy-related penalty under section

6662(a). We conclude that petitioner is liable for the accuracy-

related penalty for each of the years in issue.

C. Whether Respondent Should Be Sanctioned

Petitioner contends that we should sanction respondent

because he alleges that respondent violated his procedural rights

under sections 6001, 6011, 6012(a), and 6703(a), IRS Publication

1, “Your Rights as a Taxpayer”, and IRS Privacy Act Notice 609 by

failing to explain a document relating to his 1993 tax year

(which is not before the Court) and by refusing to settle this

case. We disagree. Petitioner has not shown that respondent

violated his rights in any way. We conclude that sanctions are

not appropriate on this record.

To reflect the foregoing,

Decision will be

entered for respondent.