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Where the size of the payment is clearly out of
proportion to the benefit received, it would not serve
the purposes of §170 to deny a deduction altogether. A
taxpayer may therefore claim a deduction for the
difference between a payment to a charitable
organization and the market value of the benefit
received in return, on the theory that the payment has
the "dual character" of a purchase and a contribution.
See, e.g., Rev. Rul. 67-246, 1967-2 Cum. Bull. 104
(price of ticket to charity ball deductible to extent it
exceeds market value of admission) * * * . [United
States v. Am. Bar Endowment, supra at 117.]
A taxpayer claiming a charitable contribution deduction under the
"dual character" theory, however, "must at a minimum demonstrate
that he purposely contributed money or property in excess of the
value of any benefit he received in return." Id. at 118; see also
Sklar v. Commissioner, 282 F.3d 610, 621-622 (9th Cir. 2002),
affg. T.C. Memo. 2000-118.
Petitioners argue that they transferred their medical
practices to SMF, a section 501(c)(3) organization, in a
transaction in which they agreed to accept a cash payment equal to
the value of the tangible assets of their respective practices and
no consideration for the intangible assets, because a payment for
goodwill would have violated Federal law. Because they received
no consideration for the intangible assets, they made a
contribution thereof with the requisite donative intent,
petitioners contend. In petitioners' view, the value of that
contribution is equal to each petitioner's allocable share of the
fair market value of the intangible assets of the medical group,
SWMG, formed when the transfers were made (as estimated by expert
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