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contribution.” H. Rept. 103-111, at 783, 785 (1993), 1993-3 C.B.
167, 359, 361. Congress enacted the substantiation requirements
of section 170(f)(8) to require charitable organizations that
receive quid pro quo contributions, i.e., payments made partly as
a contribution and partly in consideration for goods or services
provided to the donor by the donee organization, to inform their
donors that the deduction under section 170 is limited to the
amount by which the payment exceeds the value of goods or
services provided by the charity. Id.
Petitioners and NHF designed a scheme purporting to provide
no benefits to petitioners in exchange (or consideration) for
petitioners’ payments. However, petitioners received substantial
benefits from NHF under the life insurance policy. In the
documents structuring this transaction, petitioners and NHF
avoided stating any obligation of NHF and made it appear that
petitioners made an outright gift to NHF with no quid pro quo.
However, petitioners expected, and they told NHF that they
expected, NHF to use their contributions for both their and NHF’s
benefit.
Petitioners and NHF both had incentives to proceed under
this scheme; with the pot sweetened by charitable contribution
deductions, it was in both parties’ interests (1) for NHF to
continue to pay the insurance premiums, and (2) for petitioners
to continue to make payments to NHF. NHF would be entitled to
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