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December 27, 1982, letter stated: “THC will pay its note to
Kanter, who will, in turn, see to providing these funds to JUF.”
In a letter to Kanter dated December 30, 1982, JUF
acknowledged its receipt of the THC promissory note. The
December 30, 1982, letter further stated that “This note has been
assigned by you to * * * JUF as a charitable contribution, and we
are pleased to accept it as such.”
On February 28, 1983, THC paid to Kanter the full $15,000 in
principal due on the promissory note, plus interest of $370. On
that same date, Kanter then paid $15,000 to JUF by issuing to JUF
his own $15,000 check. Kanter did not pay over to JUF the $370
in interest he received on the THC promissory note.
On their 1982 income tax return, the Kanters claimed a
$15,000 charitable deduction for Kanter’s contribution to JUF.
On their 1983 income tax return, the Kanters reported the $370 in
interest THC paid on the THC note as interest income. Respondent
disallowed the $15,000 JUF charitable contribution deduction
claimed by the Kanters.
OPINION
A. The Parties’ Arguments
Petitioners contend they are entitled to a charitable
contribution deduction for 1982 of at least $14,700, which they
maintain was the THC promissory note’s fair market value on the
date of its contribution to JUF in December 1982. Petitioners
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