Danvis S. and Sheryl S. Smith - Page 5

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               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 to              

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