Tax Court: No Mercy For Donors with Inadequate Receipts


As most people are aware, the tax laws require donors to maintain documentation to substantiate their charitable contribution deductions. If audited, donors must be able to provide the IRS with qualifying receipts of certain contributions or risk the disallowance of their claimed deductions. A recent ruling by the U.S. Tax Court, Durden v. Commissioner of Internal Revenue, demonstrates the dangers to donors and charities of not complying with the strict content requirements for charitable contribution acknowledgements.

David and Veronda Durden had contributed $25,171 in 2007 to the Nevertheless Community Church and received a written acknowledgement of their contributions. Unfortunately, their receipt failed to state that the Durdens had not received any goods or services in exchange for their contributions. After the IRS disallowed the Durdens' deduction for insufficient acknowledgement, the Durdens obtained and provided to the IRS a second acknowledgement from their church, this time indicating that the Durdens received no goods or services in return for their 2007 contributions. The IRS rejected that second acknowledgement as well for not meeting the "contemporaneous" requirement. The Durdens sought relief from the Tax Court, but the Tax Court concluded that the Durdens had "failed strictly or substantially to comply with the clear substantiation requirements of section 170(f)(8), and their deduction for the charitable contributions in issue for 2007 must be disallowed." On May 17, 2012, the Tax Court therefore affirmed the IRS's disallowance of the deduction.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Gammon & Grange, P.C. | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.