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with respondent’s Appeals Officer Laura M. Gonzalez in Omaha to
administratively resolve the cash contribution issues determined
in the notice of deficiency and raised by the pleadings. Ms.
Gonzalez requested substantiation of the cash contribution
deductions claimed on petitioners’ return. In particular, she
requested receipts or evidence of payment and information showing
that any entity to which a contribution was made was one that
qualified under section 501(c)(3).2
Following the exchange of multiple letters between the
parties, on January 6, 2006, one of petitioners’ representatives,
Attorney Eric Johnson, sent Ms. Gonzalez a letter which, in
pertinent part, contained the following:
I propose that we settle this case. I think it would
be fair for the government to agree that the taxpayers
may deduct as a charitable contribution the $74,200
paid to Open Heaven Ministries for tax year 2002. As
stated in my letter of August 23, 2005, the itemized
list of contributions made by the taxpayers after the
Service Center contact totals $223,906, which is
somewhat less than the $226,774 reported on the income
tax return, and of that $223,906, the taxpayers are
unable now to produce substantiation for $1,825, which
leaves $222,081 in substantiated contributions. The
taxpayers hereby offer to settle this case on the basis
that they are entitled to $222,081 of the charitable
contribution of $226,774 reported on the return.
If you are not satisfied with various aspects of the
Open Heaven Ministries issue, we would invite a
counter-offer from the government containing a
percentage disallowance of the Open Heaven Ministries
contribution deduction for 2002 reflecting what the
2 Section references are to the Internal Revenue Code as
amended and in effect for the period under consideration.
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