Friday, April 17, 2009
In a recent opinion, Maddux v. Commissioner, T.C.Summ.Op., 2009-30, the Tax Court ruled that a taxpayer could not use a carryover charitable deduction that had expired. Note that this case was heard pursuant to section 7463 and the opinion cannot be cited as precedent.
In the course of an audit of the taxpayer's 2002 return, the IRS determined that the taxpayer had a charitable contribution carryover from 2002, as permitted under section 170(d)(1). The taxpayer assumed that the carryover could be used at any time in the subsequent five years, and took some of the deduction in 2005. The Tax Court explained that the carryover is to be treated as a deduction in each of the five succeeding years and that some amount expires each year, whether or not the deduction is used. Thus, when the taxpayer tried to use the carryover in 2005, some of the amount had already expired.
Thanks to Patricia Brosterhous and her IICLE Flashpoint
s (a free electronic newsletter produced by the Illinois Bar) for pointing out this opinion.