The Tax Court on Thursday denied a taxpayer's claimed charitable deductions for $200 cash given to panhandlers and $28,655 of household items donated to Goodwill. Roberts v. Commissioner, T.C. Summ. Op. 2010-76 (June 17, 2010):
For 2005 petitioner claimed, on Schedule A, Itemized Deductions, a $200 cash charitable contribution, which he described as donations to panhandlers and the Salvation Army, and $28,655 of noncash charitable contributions. Included with his 2005 Federal income tax return was a self-prepared substitute Form 8283, Noncash Charitable Contributions, in which petitioner claims to have contributed more than 450 items of property consisting primarily of used clothing, but also including, among other things, towels, bedsheets, books, costume jewelry, children's toys, and glass lamps. Petitioner's descriptions of the items of property allegedly contributed to charity are vague and include self-assigned estimates of their values. Petitioner also provided copies of five receipts from Goodwill Industries (Goodwill) dated January 9, April 13, May 18, September 16, and October 1, 2005. Only one of the receipts bears a signature indicating that the donated items were received by Goodwill, and the receipts provide nothing more than vague references to the items allegedly donated; e.g., "men's boots", "ladies' clothes", "men's clothes", "boy's clothes", "women's clothing", and "4 bags of clothes". …
With respect to the claimed $200 of cash contributions to charity, petitioner has failed to offer anything more than his self-serving testimony that he made various donations to panhandlers and the Salvation Army. … Petitioner did not offer any canceled checks, receipts, or other reliable evidence to substantiate the claimed $200 of cash contributions to charity. Accordingly, we sustain respondent's determination to deny to petitioner a deduction for the claimed $200 of cash contributions to charity.
[P]etitioner has neither attached to his Federal income tax return nor proffered an appraisal summary to establish the values of the items allegedly donated. … [T]he copies of the five receipts from Goodwill neither reconcile with petitioner's substitute Form 8283 nor provide anything more than vague descriptions of the items donated. Accordingly, we find that petitioner has failed to establish, by proper and adequate substantiation, entitlement to a charitable contribution deduction for the noncash items he claims to have donated to charity. We therefore sustain respondent's determination to deny petitioner a deduction for noncash contributions to charity.
14 responses to “Tax Court Denies Charitable Deduction for $200 Cash Given to Panhandlers & $29k of Stuff Donated to Goodwill”
Under the code a donation to a panhandler is not an allowable charitable deduction. It is a donation to an individual.
Another backdoor process this administration is using to raise taxes on individuals all the while claiming otherwise. Also, if this ruling is applied more broadly, it will have a negative affect on amount of personal charitable giving in this country. As charities are weakened the state will step in to replace those services previous supplied by private means. I am waiting for the grievance mongers to file suit and claim that charitable deductions are discriminatory since “only the wealthy” are functionally able to receive them and they must be curtailed in the name of social and economic justice.
Russian roulette on this one. Unfortunately, this taxpayer got the wrong judge. Anyone who ever has given anything to goodwill knows it works basically like this: hand us the stuff to put in the bins or trucks, we hand you slips to fill out and to say what you gave. The space on the form is like 4 or 5 lines long, maybe 2″ x 3″ of space. Anyone who made a major donation would need 100 slips to provide the level of detail J. Ruwe wanted.
Let that be a lesson to you all. This is why we have digital cameras. take pictures of every item you gave, of you putting the items into the bags, giving the bags to the goodwill employee, and getting the goodwill slip. and then offer to enter the 500-2500 photos into evidence. I am sure the IRS and the Tax Court are going to LOVE having to review that kind of record–which is what they are asking for.
Also, buy Turbo Tax. It has a deduction calculator program that is based on detailed research and information. Assign each item you give the value stated by the turbo tax program (personally, I use lower figures, but could justify them or could claim for a refund based on the substantially higher figures provided by turbo tax than I claimed). I am sure the IRS and the court will LOVE litigating/deciding whether the values and figures for charitable deductions of thousands of items provided by turbo tax based upon extensive and detailed research can or cannot be relied upon.
And poor Roberts chose to go with a summary case, so there is no appeal. Hopefully next year a different judge will swing by Roberts’ town.
If you are trying to be insulting or derogatory to the IRS due to this nickel and dime disallowance, you succeeded,…. but you failed.
The practice of deducting your “trash” for value from your American tax return needs to end! Haven’t you gotten the memo. WE’RE BROKE. So, give your junk to an organization, good for you, feel good about yourself, but PLEASE, don’t deduct 25K from your taxable income because of it. That starts to get into my pocket…. and by the way, what about appraised art???? You can get some paid conspirator to sign a document saying your sculpture of beer cans and auto parts is priceless modern art…. so, take a #2 million deduction, and carry over the unuse amout for the next 20. Whoopie! Write an article on that law dog.
Does the IRS hate the thought that the needy might get help from private sources that it considers competing with government welfare?
I can see questioning some unreasonably high donation claims, but I and most everyone I know puts cash in donation buckets and give to people who really need help. You can’t get a receipt for everything, so there has to be a reasonableness allowance.
Otherwise, before giving handouts, I’ll ask street beggars to verify that they are a 501-(c)(3) and to give me a receipt. I’m sure there are pages of regs and numerous forms that any homeless person can understand and should follow.
Do you think that the charitable deduction for the cash given to panhandlers would have been allowed had the petitioner been able to substantiate it? I don’t know how someone could go about doing it though it’s quite possible that you could get a statement from the panhandler if the panhandler is a well-known person in the neighborhood (e.g., you run by the same guy every time on the way to the grocery store).
The court didn’t seem to say as a matter of law that cash given to a panhandler cannot be deducted as a charitable contribution.
Claiming $28,655 for 450 items is about $64/item. I am pretty sure the donated items did not have such a value. If the taxpayer had claimed say $450, $1 per item, the IRS might not have challenged the Goodwill receipts. The amount matters too, not just the evidence needed to sustain the amount.
The guy got greedy. As a gross generalization, I have observed that non-profit thrift store prices are about 15% of what the same item would sell for new. On that basis, the original cost of the donated goods would be about $191,000. Give me a break!
There is also an ancient Salvation Army valuation guide on the internet and a valuation spreadsheet. I can email you a copy of the spreadsheet if you wish.
Be careful with Turbo Tax. They are owned by Intuit. Intuit outsources customer service to the Philippines so, by definition, use TT and possibly send your tax data to a third world country. The very thought!
Photograph your donations; it’s easy.
Make a typed easy to read list. Nothing says, “I’m cheating!” as much as a messy difficult to read list of items. You can take a detailed list to Goodwill or to the Salvation Army and attach it to their receipt. Bring a stapler.
Had this individual not claimed an exorbitant amount given to Goodwill, the IRS probably would not have challenged the money given to panhandlers. If this individual wanted to receive full value for his contribution he should have sold the valuable items at a garage sale and donate the proceeds to a charity and get a receipt for the cash given.If he sold the stuff for a $191,000, he could set up his own charitable foundation.
Lets face it. What almost everyone is saying is this TP got DIF’ed.
450 items is a lot of stuff. I don’t know many people who give that many items to good will. and what if the items were furniture (sold wood, very expensive; custom furniture, etc.) TVs (I gotta have a 1080p 120hz LED HDTV or I’ll die with this old 720p 60hz LCD).
Look, the TP did not need to know thing 1 about the DIF to know that certain things raise red flags at the IRS. But never, never underestimate the power of stupidity (I mean greed, no wait I mean stupidity plus greed).
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.
We advise our clients to ask the personnel who receive their donations of “things” to sign our client’s itemized listing of items given. Our review shows very few such itemized receipts from Goodwill, and the like organizations get signed, and our clients advise us that they ask for a signature, but that the “street person” looking person who took in their property at the Goodwill and other such places refused to sign their itemized listing. We advise our clients to photograph items donated, list the approximate cost of each item, and claim items only donated in good condition, keep the FMV at a reasonable rate, for example 20% of cost, give or take 5% high and 20% to 1% low on the itemized listing. We remind our client that hogs get slaughtered. We have not had a problem with claiming donations of things, yet in the past 32 years.