Charitable Contribution DENIED!

21 May 2012 / Uncategorized / Comments Off on Charitable Contribution DENIED!

Charitable Contribution DENIED!

The amazing result in this case shows why paying attention to the formalities that your CPA hounds you about is critically important should the IRS ever come and want to see the proof.  When dealing with the IRS truth doesn't matter.  It's ALL ABOUT THE PROOF!

In 2007, Mr. & Mrs. Durden, being good, honest Christian church-goers dutifully contributed their 10% tithe of $22,517 to their church. Although the church provided them with a timely statement acknoweldging the $22,517 contribution, it did not state whether they had received any goods or services as required by Internal Revenue Code Section §170(f)(8)(A).  After being notified by the IRS of this deficiency, the Durdens did what any taxpayer in the same situation would do; they obtained another statement from the church acknowledging the $22,517 contribution which included the required verbiage about receiving no goods or services.

The  IRS continued to deny the deduction because thier position was that both acknowledgments failed the requirements to deduct charitable contributions under Internal Revenue Code Section §170(f)(8)(A):

(1) the first acknowledgment did not include the required goods or services statement; and

(2) the second acknowledgment was not contemporaneous within the meaning of Internal Revenue Regulation § 1.170A-13(f)(2) because it was not received by the Durdens before they filed their 2007 tax return.

The Tax Court accepted the IRS’s position and the Durdens conceded that they did not strictly comply with the statute, and the Tax Court rejected their attempt to prove substantial compliance.

This error, BY THE CHURCH, which the taxpayers failed to catch, cost them over $10,000 in tax, penalties and interest.  You can read the court case for yourself at

Don't let this happen to you!!  If you should need any assistance with what the Internal Revenue Service requires for substantiation of any deduction from charitable contributions to meals & entertainment to auto expenses or travel, please give Widget a call.

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