T . C . Summary Opinion 2010 -141

CLC

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

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.

SERVEDSep212010

- 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. '

s

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)

$12,396 from Westgate Miami Beach, Ltd.

2001.2

(Westgate),

for

on May 20,

Petitioner executed a mortgage agreement with Westgate

for the purchase of her timeshare.

On October 12, 2004,

2A 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).

r

3

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yetitioner made full payments and satisfaction of the mortgage

ith Westgate

During 2006, petitioner donated her timeshare to Tracets

Foundation (Tracets) .

501(c) (3)

Tracets, which claims to be a section

foundation,3 is dedicated to preserving- lakes and

streams for future generations.

:Tracets "partnered" with,

holesale Timeshare "Services and eMidsouth, Inc., to coordinate

he 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 ans appraisal «of the value of the

imeshare made when it was transferred.

Petitioner attached Form

283, Noncash Charitable,Cóntributions,

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

Respondent does not challenge whether Tracets meets the

efinition of an organization to which a contribution is eligible

or 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 whetÑer 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,

Commissioner, 503 U.S. 79, 84

Helvering,

292 U.S. 435,

Inc. v.

(1992); New Colonial Ice Co. v.

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."

Sec. 1.170A-13 (a) (1), Income Tax Regs.

Additionally,

4Petitioner 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).

sFor 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...)

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5

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for contributions of $250 or more, deductions are not allowed

nless the taxpayer substantiates the côntribution by a

bontemporaneous written acknowledgment by the donee

organization.

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 cònsideration", 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 thati 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, Še

s ( . . . 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.

'Separate contributions of less than $250 are not subjeet 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. 1.170A13 ( 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. 108357,

sec. 883, 118 Stat. 1631, to codify the substantiation

requirements previously addressed in the regulations and applies

to contributions made after June 3, 2004.

T.C. Memo. 2007-368, affd.

Smith v. Commissioner,

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.'

Seå.

170(f) (11) (E).

7Sec. 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.

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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 stestified that she never received an

åppraisal from Westgate upon 'the purchase of her timeshare in

001.

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

keturn, the filing date.

Regs.

Sec . 1.170A-13 (c) (3) (i) (A) , Income Tax

On October 19, 2006, the Internal Revenue Service issued

transitional guidance to provide a safe harbor for taxpayers in

ponjunction with new section 170 (f) (11) (E) .

2006 2 C.B. 902.

Notice 2006-96,

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

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.