The opinion
T.C. Memo. 2016-39
UNITED STATES TAX COURT
CHARLES E. BROWN AND CONNIE E. BROWN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 18360-14. Filed March 3, 2016.
Charles E. Brown and Connie E. Brown, pro sese.
Lewis A. Booth, II, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COHEN, Judge: Respondent determined a deficiency of $4,018 in
petitioners’ Federal income tax for 2010. After concessions, the issues for
decision are whether petitioners are entitled to medical expense or charitable
contribution deductions beyond those allowed in the statutory notice or conceded
by respondent after trial. All section references are to the Internal Revenue Code
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[*2] in effect for the year in issue, and all Rule references are to the Tax Court
Rules of Practice and Procedure.
FINDINGS OF FACT
Petitioners resided in Texas when they filed their petition. During 2010,
Charles Brown (petitioner) was the founder/pastor of the William Temple Church
of God in Christ, Inc. He received a salary of $50,799.32 that year. On their 2010
Federal income tax return, petitioners claimed itemized deductions totaling
$51,364, including deductions for medical insurance premiums of $12,944 and
charitable contributions of $19,224. Upon examination of the return the Internal
Revenue Service allowed a deduction for $4,227 of contributions but disallowed
the medical expense deduction because the substantiated amount of $3,844 was
less than 7.5% of petitioners’ adjusted gross income.
OPINION
Petitioners bear the burden of proving entitlement to the deductions that
they claim. See Rule 142(a); New Colonial Ice Co. v. Helvering, 292 U.S. 435,
440 (1934); Rockwell v. Commissioner, 512 F.2d 882, 886 (9th Cir. 1975), aff’g
T.C. Memo. 1972-133.
After trial respondent conceded an $8,629.50 deduction for Connie E.
Brown’s portion of health insurance premiums deducted from petitioner’s
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[*3] compensation. That amount was inferred from partial records of petitioner’s
compensation from his church, which showed only certain amounts designated as
“health”. There is no evidence that reliably substantiates that any specific amount
shown on the partial records was actually paid as deductible premiums for Mrs.
Brown’s health insurance. Amounts shown on the exhibits petitioners rely on
were inconsistent with each other and with petitioners’ tax return. Without more
we cannot allow any amount greater than that conceded by respondent.
Respondent declined to allow any additional deduction for charitable
contributions because the records that petitioner produced were all self-generated
and were not supported by contemporaneous receipts or bank records satisfying
the special rules set forth in section 170(f)(8) and (17), applicable to charitable
contributions. The relevant portions of those sections provide:
SEC. 170(f). Disallowance of Deduction in Certain Cases and
Special Rules.--
* * * * * * *
(8) Substantiation requirement for certain
contributions.--
(A) General rule.--No deduction shall be allowed
under subsection (a) for any contribution of $250 or
more unless the taxpayer substantiates the contribution
by a contemporaneous written acknowledgment of the
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[*4] contribution by the donee organization that meets
the requirements of subparagraph (B).
(B) Content of acknowledgement.--An
acknowledgement meets the requirements of this
subparagraph if it includes the following information:
(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.
For purposes of this subparagraph, the term
“intangible religious benefit” means any intangible
religious benefit which is provided by an
organization organized exclusively for religious
purposes and which generally is not sold in a
commercial transaction outside the donative
context.
(C) Contemporaneous.--For purposes of
subparagraph (A), an acknowledgment shall be
considered to be contemporaneous if the taxpayer
obtains the acknowledgment on or before the earlier of--
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[*5] (i) the date on which the taxpayer files a
return for the taxable year in which the
contribution was made, or
(ii) the due date (including extensions) for
filing such return.
* * * * * * *
(17) Recordkeeping.--No deduction shall be allowed
under subsection (a) for any contribution of a cash, check, or
other monetary gift unless the donor maintains as a record of
such contribution 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.
Petitioners contend that their contributions were all made in cash.
However, they did not produce any receipts purporting to acknowledge cash
contributions until after respondent’s pretrial memorandum was filed. Petitioners’
niece testified at trial purporting to acknowledge the cash contributions, but the
receipts did not appear to be contemporaneous records. Ten of the receipts
reflected amounts in excess of $250 and totaled $4,700, and no acknowledgment
satisfying the requirements of section 170(f)(8) was provided. The total of the
amounts shown on the receipts provided did not equal the amount claimed on
petitioners’ return.
Despite requests by respondent over many months before trial, petitioners
did not produce any bank records showing cash withdrawals consistent with the
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[*6] level of contributions claimed. The amounts of cash contributions that
petitioners claimed to have made during certain short periods are improbable, and
there is no independent verification of the authenticity of the receipts or the
reliability of what they purport to show. Most significantly, neither petitioner nor
Mrs. Brown testified under oath that they in fact made the cash contributions
claimed.
We are not persuaded that the claimed cash contributions have been
substantiated as required by law. No further deductions may be allowed. To
reflect the concessions made by respondent,
Decision will be entered
under Rule 155.