- 4 - As a general rule, personal, living, and family expenses are nondeductible. Sec. 262(a). Subject to limitations not relevant here, section 170(a) allows a deduction for charitable contributions made during the taxable year to certain types of organizations. For a contribution to be deductible, it must be made to an organization “no part of the net earnings of which inures to the benefit of any private shareholder or individual”. Sec. 170(c)(2)(C). The facts in the case before us are substantially similar to the facts in a prior case before this Court, Miedaner v. Commissioner, 81 T.C. 272 (1983). In Miedaner, the taxpayers established and subsequently operated an entity known as the Church of Physical Theology. They had established a separate checking account for the church, but used funds from this account for a variety of personal expenses, primarily for “living allowances” for each of the taxpayers. In sustaining the Commissioner’s disallowance of deductions claimed by the taxpayers for amounts purportedly contributed to the church, this Court stated: the church was essentially inseparable from the personal interests of Terrel and Penelope, and we agree with respondent’s observation that petitioners literally bathed themselves in personal benefits. Their “contributions” funded their living allowances * * * . The church account was simply a magic wand whereby personal expenses were converted into tax deductions. Where contributions go toPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
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