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petitioners, primarily in the form of a “housing allowance”.2
Petitioner, upon receiving paychecks from unrelated employment,
would sign the back of the paychecks over to Alpha Ministries
prior to depositing them into a checking account bearing the
designation “Alpha Ministries”. The account into which the funds
were deposited was owned and controlled by petitioners, and
petitioners alone had authority to use the funds therein.
Petitioners filed joint Federal income tax returns for the
years in issue. On these returns, petitioners claimed deductions
of $27,150 in 1995 and $30,500 in 1996 for charitable
contributions purportedly made to Alpha Ministries. In the
statutory notice of deficiency, respondent disallowed these
deductions in full.
2Petitioners, relying on uncorroborated summary documents
entered into evidence, argue that Alpha Ministries had the
following income and expenses for each of the years in issue:
1995 1996
Income
Cash donations by petitioners $31,560 $25,740
Cash donations by other individuals 290 100
Interest on deposits 12 18
31,862 25,858
Disbursements
Petitioner’s housing allowance $22,000 $24,775
Petitioner’s health care allowance 700 -0-
Petitioner’s auto/travel allowance 700 200
Petitioner’s books and materials 94 -0-
Loan to petitioner 8,135 -0-
Supplies, postage, fees, and copies 34 -0-
31,663 24,975
Although we do not accept these figures as actual amounts of
income and expenses of Alpha Ministries, we accept them as an
admission by petitioners that any funds received by, or
designated for use by, Alpha Ministries were used almost
exclusively for the personal benefit of petitioners.
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