Neal v. Commissioner

MEMORANDUM FINDINGS OF FACT AND OPINION

COHEN, Judge: Respondent determined a deficiency of $ 2,264 in petitioner's Federal income taxes for 1983. The issue for determination is whether petitioner is entitled to certain charitable contributions deductions.

FINDINGS OF FACT

Some of the facts have been stipulated, and the stipulation is incorporated in our findings by this reference. Petitioner was a resident of Jamaica, New York, at the time he filed his petition.

On his tax return for 1983, petitioner claimed deductions for alleged donations to the Faith Baptist Church of Hempstead, New York, consisting of a 2-percent interest in the ownership of an invention to measure an arc and a $ 50,000 claim for first prize in a sweepstakes. The amount claimed was $ 11,095, which coincided with 50 percent of petitioner's reported adjusted gross income. Respondent disallowed the deductions.

OPINION

At the time of*171 trial, petitioner testified that he won $ 50,000 in a sweepstakes conducted by Cheeselovers International, Inc., but that there was a delay in awarding the money. Therefore petitioner directed that the $ 50,000 be donated to his church. Petitioner also testified that he donated to the church an invention that he valued at historical cost. Additional testimony of petitioner suggested that he was the victim of a conspiracy, but this testimony was unclear and appears irrelevant to our determination. Petitioner stated that he had documentation in support of his claims but that he had been unable to locate it. The partial documentation submitted was inconclusive.

Petitioner has the burden of proving that respondent's determination is incorrect. Welch v. Helvering,290 U.S. 111 (1933); Rule 142(a), Tax Court Rules of Practice and Procedure. Section 170(a)(1) ¹ allows a deduction (subject to certain limitations not relevant here) for charitable contributions made during the taxable year. Section 1.170A-1(c)(1), Income Tax Regs., generally provides that if a charitable contribution is made in property other than money, the amount of the contribution is the fair market*172 value of the property at the time of the contribution. Fair market value is defined as "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both have a reasonable knowledge of relevant facts." Section 1.170A-1(c)(2), Income Tax Regs.

Petitioner presented no evidence from which we can determine the fair market value of the sweepstakes claim that he had or of the interest in a invention that he donated to the church. Because petitioner did not receive the $ 50,000 that he claims to have won, he cannot be said to have made a cash contribution in the amount of $ 50,000. His claimed contribution of a 2-percent interest in an invention is subject to additional requirements concerning contributions of less than an entire interest. Section 170(f)(3)(A). ² He has not shown that those requirements have been met.

*173 Moreover, if petitioner had won $ 50,000 in the sweepstakes, he would be required to report that amount as income before claiming a charitable contribution. Section 74(a); Downes v. Commissioner,30 T.C. 396 (1958); Sykes v. Commissioner,24 T.C. 1156 (1955). A subsequent attempt to assign the winnings to his church would not avoid taxation of the proceeds to him. Lucas v. Earl,281 U.S. 111 (1930). ³ Petitioner did not report $ 50,000 as income. If he had received and reported the $ 50,000 and then donated it to his church, his deduction for the year in issue would still be limited in accordance with section 170(b) to 50 percent of the adjusted gross income.

Respondent's determination must be sustained.

Decision will be entered for the respondent.