Tax Court in Brief | Albrecht v. Commissioner | Charitable Contributions and Contemporaneous Written Acknowledgements

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Albrecht v. Comm’r, T.C. Memo 2022-53 | May 25, 2022 | Greaves, J. | Dkt. No. 13314-20.

Opinion

Short Summary: Martha Albrecht donated 120 items of Native American jewelry and artifacts (donation) to the Wheelwright Museum of the American Indian (Museum). Pursuant to the express terms of a “Deed of Gift” (deed), Albrecht transferred all her rights in the property, unless otherwise stated in a separate Gift Agreement. The Gift Agreement was not included with the deed, and the Museum did not provide Albrecht with any further written documentation concerning the donation. Albrecht filed Form 1040, U.S. Individual Income Tax Return, for the year at issue in which she reported the donation on Schedule A, Itemized Deductions, and attached a copy of the deed. The return was examined, and the IRS disallowed the donation on the ground that the requirements of section 170 were not met. Albrecht sought review in the Tax Court.

Key Issue:

Primary Holdings:

Key Points of Law:

Insights: To enjoy a deduction for a charitable contribution, the taxpayer must strictly comply with the contemporaneous written acknowledgement requirements of section 170 and the related Treasury Regulations. In Albrecht, the gift deed referenced the Gift Agreement and expressly stated that it superseded the terms of the deed with respect to the donor’s rights in the donation. The deed failed to indicate, for example, that “no goods or services were provided by the Museum to Albrecht in exchange for the donation.” The deed made reference to a separate Gift Agreement, which was not provided to Albrecht before she filed the tax return in issue and also failed to adequately address the CWA requirements. Thus, the deed, by its terms, provided Albrecht the ability—or possibility—to retain an interest in the donation. These errors in substantiation proved fatal to a charitable contribution deduction. On March 22, 2022, Freeman Law attorney, Cory Halliburton, provided great insight on the tax treatment of charitable contributions. See Joint Committee on Taxation Report on Tax Treatment of Charitable Contributions. If only Martha Albrecht had the benefit of that wise counsel when she made the generous donation to the Wheelwright Museum of the American Indian.