David C. Roark and Estate of Irene Roark, Deceased, David C. Roark, Executor - Page 16

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          1(h)(4)(i), Income Tax Regs.  But if a taxpayer knew or should              
          have known that a charity’s estimate of the fair market value of            
          the consideration it provided was not reasonable, he cannot take            
          the deduction.  Sec. 1.170A-1(h)(4)(ii), Income Tax Regs.  And              
          that’s the situation here. Even if Roark did not have actual                
          knowledge that NCF would pay the policy premiums, he should have            
          known.  He was a sophisticated businessman, and all the paperwork           
          was available to him.  He signed much of it.  All the letters               
          were sent to him.  It would have been simply unreasonable for him           
          to conclude that this split-dollar agreement did not benefit him            
          and his family at all.                                                      
               In the end, then, this case is indistinguishable from Addis.           
          Though NCF wrote that “no goods or services have been provided in           
          connection with this gift” each time Roark sent in money, he knew           
          or should have known that he would receive some value in return.            
          Since the donation was not properly substantiated under section             
          170(f)(8), and the Roarks unreasonably relied on it contrary to             
          the provisions of section 1.170A-1(h)(4), Income Tax Regs., we              
          hold that they may not deduct the $160,000 he contributed to NCF.           
          We need not reach any other arguments, but because the                      
          Commissioner conceded a $20,000 increase to the Roarks’                     
          charitable deduction,                                                       
                                             Decisions will be entered                
                                        under Rule 155.                               






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