Income Tax—Taxpayers Failed to Substantiate Noncash Charitable Contributions

Posted by Kim Chen on August 1st, 2016

In 2010 and 2011, the taxpayers claimed noncash charitable contribution deductions of $79,000 and $90,000, respectively. These amounts represented approximately 46% of the taxpayers’ adjusted gross income for each year. According to summary spreadsheets prepared by the taxpayers after their returns were filed, the contributed property included over $110,000 of used clothing. Upon audit, the IRS disallowed most of the deductions, concluding that the taxpayers failed to properly substantiate their donations. The Tax Court agreed, finding the claims to be wholly unrealistic and incredible. Perry W. Payne , TC Summ. Op. 2016-30 (Tax Ct.).