David Daniel and Annette Daniel - Page 8

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                  Respondent contends that petitioners have not proved that                              
            they made the charitable contributions in issue, and as discussed                            
            infra, they acted fraudulently in claiming a portion of such                                 
            amounts.                                                                                     
                  Section 170 allows as a deduction any charitable                                       
            contribution actually paid during the taxable year.  Sec.                                    
            170(a)(1); sec. 1.170A-1(a), Income Tax Regs.  The term                                      
            "charitable contribution" is defined under section 170(c) as:                                
                        a contribution or gift to or for the use of --                                   
                              (1) A State, a possession of the United                                    
                        States, or any political subdivision of any of the                               
                        foregoing, or the United States or the District of                               
                        Columbia, but only if the contribution or gift is                                
                        made for exclusively public purposes.                                            
                              (2) A corporation, trust, or community chest,                              
                        fund, or foundation --                                                           
                                     (A) created or organized in the United                              
                              States or in any possession thereof, or under                              
                              the law of the United States, any State, the                               
                              District of Columbia, or any possession of                                 
                              the United States;                                                         
                                     (B) organized and operated exclusively for                          
                              religious, charitable, scientific, literary, or                            
                              educational purposes, * * *                                                
                                     (C) no part of the net earnings of which                            
                              inures to the benefit of any private shareholder                           
                              or individual; and                                                         
                                     (D) which is not disqualified for tax                               
                              exemption under section 501(c)(3) by reason of                             
                              attempting to influence legislation, and which                             
                              does not participate in, or intervene in * * *,                            
                              any political campaign on behalf of * * * any                              
                              candidate for public office.                                               
                                     *     *     *     *     *     *      *                              




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