Tuesday, March 13, 2012
7th Circuit Rejects Charitable Contribution Deduction for Donated Home Used for Fire Department Training
The U.S. Court of Appeals for the Seventh Circuit recently affirmed the Tax Court's denial of a $76,000 charitable contribution deduction for a house donated by the taxpayers to a local fire department for use in a firefighting training exercise. The exercise resulted in the demolition of the house, which then permitted the taxpayers to proceed with their plan to build a new house on the same location. In Rolfs v. Commissioner, the appellate court concluded that by conditioning the donation on the house being destroyed, the taxpayers effectively reduced the net value of the gift to zero given that the value to the taxpayers of the demolition services provided by the fire department was approximately $10,000.
Hat Tip: TaxProf Blog