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Issue 2. Charitable Contribution Deduction
Respondent argues that petitioners are not entitled to a
charitable contribution deduction because the amount of the
encumbrance exceeded the fair market value of the property at the
time of the transfer. Petitioners argue that they should be
allowed a charitable contribution deduction for the projected
income stream associated with the lease.
A taxpayer may make a charitable contribution by selling or
disposing of property to a charity for less than its fair market
value. Estate of Bullard v. Commissioner, 87 T.C. 261, 265
(1986). The amount of the charitable contribution resulting from
such a “bargain sale” generally is the excess of the fair market
value of the property over its sale price. Id.; Stark v.
Commissioner, 86 T.C. 243, 255-256 (1986); Knott v. Commissioner,
67 T.C. 681 (1977); Waller v. Commissioner, 39 T.C. 665, 677
(1963). Furthermore, to the extent that the fair market value of
property contributed exceeds the debt on the property, taxpayers
are entitled to a charitable contribution deduction. Guest v.
Commissioner, supra at 25.
A taxpayer has the burden of proving the amount of a
charitable contribution that he or she may deduct. Rule 142(a);
Guest v. Commissioner, supra; Lamphere v. Commissioner, 70 T.C.
391 (1978). Section 1.170A-1(c)(1), Income Tax Regs., provides
that the amount of a charitable contribution of property other
than money is the fair market value of the property at the time
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