Estate of Miller v. Commissioner, Docket No. 5875-88.

• Decision Date: 09 October 1991
• Docket Number: Docket No. 5875-88.
• Citation: 62 T.C.M. 997
• Parties: Estate of Darwin A. Miller, Deceased, Virginia P. Miller, Testamentary Executrix and Surviving Spouse, and Virginia P. Miller v. Commissioner.
• Court: U.S. Tax Court

62 T.C.M. 997

T.C. Memo. 1991-515 Estate of Darwin A. Miller, Deceased, Virginia P. Miller, Testamentary Executrix and Surviving Spouse, and Virginia P. Miller v. Commissioner.

Docket No. 5875-88.

United States Tax Court.

Filed October 9, 1991.

Michael E. Guarisco, 650 Poydras St., New Orleans, La., David A. Aymond, and Richard K. Leefe, for the petitioners.

Stevens E. Moore, for the respondent.

Memorandum Findings of Fact and Opinion

RUWE, Judge:

Respondent determined the following deficiencies and additions to tax in petitioners' Federal income taxes:

                Additions to Tax
                Year                                         Deficiency      Sec. 66591
                1981 ....................................   $820,422.00     $246,126.60
                1982 ....................................    154,623.00       46,386.90
                1983 ....................................    182,966.00       42,854.40
                1984 ....................................     69,257.50       15,014.70
                1985 ....................................    107,920.70       26,603.16
                

After concessions by the parties, the issues for decision are: (1) Whether the burden of proof on certain issues is on respondent; (2) whether petitioners are entitled to a deduction for purported charitable contributions of animal trophies made to the State of Louisiana during the years in issue; and, if so, (3) what is the amount of the allowable deductions; (4) whether the charitable contribution deductions claimed by petitioners are limited to the fair market value of the animal trophies reduced by the amount of gain which would not have been long-term capital gain if the animal trophies had been sold at their fair market value; (5) whether petitioners can deduct expenses incurred in connection with hunting and mounting animal trophies that they purportedly donated to the State of Louisiana; (6) whether petitioners can deduct expenses associated with the care and maintenance of the animal trophies incurred after they purportedly donated the trophies to the State of Louisiana; (7) whether petitioners are liable for additions to tax for valuation overstatements under section 6659 for the taxable years 1981, 1983, and 1984; and (8) whether petitioners are entitled to deductions for the taxable years 1983, 1984, and 1985 for expenses incurred in connection with the operation of the Ram Head Hunting Lodge.

Findings of Fact

Some of the facts have been stipulated and are so found. The first and second stipulation of facts and the attached exhibits are incorporated herein by this reference.

Petitioners Darwin A. Miller and Virginia P. Miller were husband and wife and resided in Houma, Louisiana, at the time of filing their petition in this case. On November 26, 1989, Darwin A. Miller died. On June 1, 1990, this Court ordered that the Estate of Darwin A. Miller be substituted as a party petitioner for the deceased Darwin A. Miller. All references to petitioner in the singular shall hereinafter refer solely to Darwin A. Miller.

For the taxable years 1981 through 1985, petitioners timely filed their joint income tax returns. During the years in issue, petitioners claimed deductions for "noncash" charitable contributions which were identified as "museum donations" on Schedule A of these returns. Petitioners did not designate the recipient of the "noncash" contributions on their 1981 and 1982 tax returns. On their 1983, 1984, and 1985 tax returns, petitioners stated that the State of Louisiana received the "noncash" contributions.² Petitioners also claimed deductions for certain "cash" contributions for the taxable years 1981 through 1985. On their 1981, 1982, and 1983 tax returns, petitioners did not indicate the nature of these "cash" contributions. On their 1984 and 1985 tax returns, petitioners identified the "cash" contributions as "Hunts and Taxidermy," "From K-1 Entity," and "Misc. Contributions."

Respondent disallowed all of the "noncash" contributions claimed on petitioners' 1981 through 1985 income tax returns. Respondent disallowed all of the deductions claimed as "cash" contributions, except those items identified as "Misc. Contributions," on petitioners' 1981 through 1985 tax returns.³

The following table reflects the "cash" and "noncash" contributions that petitioners reported on their 1981 through 1985 tax returns:

                Petitioners' Reported Contributions
                Year                                          Cash       Noncash       Total
                1981 ....................................   $301,498   $1,229,650   $1,531,148
                1982 ....................................    255,416       54,050      309,466
                1983 ....................................    151,146      134,550      285,696
                1984 ....................................    138,825       60,300      199,125*
                1985 ....................................     67,233       44,575      111,808*
                                                            ________   __________   __________
                Totals                                      $914,118   $1,523,125   $2,437,243*
                * Due to the maximum allowable deduction limitation, petitioners only deducted $107,453
                on Schedule A of their 1984 income tax return. The excess, $93,826, was carried forward to
                petitioners' 1985 taxable year. As a result of the carryforward of the $93,826, petitioners
                only deducted $177,355 on Schedule A of their 1985 income tax return. Therefore, the total
                amount deducted was only $2,411,118
                

Donation of the Animal Trophies

Petitioner has hunted and trapped all his life. In the 1970s, petitioner began game and sport hunting. Petitioner has hunted throughout the world including Africa, Russia, Mongolia, Iran, Canada, Australia, New Zealand, Alaska, and South America.

Sometime during the 1970s, petitioner began thinking about establishing a wildlife museum. Petitioner wanted to place full-body trophies of animals that he shot on his hunting trips in this museum. Petitioner felt that a wildlife museum would educate and benefit the children of Louisiana. Petitioner decided that the way to accomplish his goal would be to hunt the animals, have them mounted, and then hold them for the State of Louisiana (the State) until the State could build a facility to house the trophies.

In 1978, petitioner arranged a meeting with the Governor of Louisiana, Edwin W. Edwards (Governor Edwards).⁴ Prior to this meeting, petitioner had never met Governor Edwards. During this meeting, petitioner explained his idea of a wildlife museum to Governor Edwards. Governor Edwards asked petitioner if he could help. Petitioner replied that an official designation by the Governor would help him gain access to hunting areas that were not otherwise accessible. Petitioner could use this access to hunt and collect animals which would later be placed in the wildlife museum. Accordingly, on June 29, 1978, Governor Edwards designated petitioner "The Official Big Game Hunter of Louisiana." Governor Edwards made the designation in order to assist petitioner in obtaining access to restricted hunting areas. The designation did not direct petitioner on when and where to hunt, nor did the State agree to pay petitioner's hunting expenses. Moreover, petitioner did not believe that he was under a legal obligation to donate the trophies he obtained with the help of the State's designation.

In 1979, petitioner again met with Governor Edwards. During this meeting, petitioner took Governor Edwards into a building located behind petitioner's house. The building housed trophies collected by petitioner. Petitioner told Governor Edwards: "these are your animals." The collection impressed Governor Edwards, and he told petitioner that he would try to obtain funding for a State facility to house the trophies. In a letter dated January 9, 1980, Governor Edwards accepted the donation of "the animals listed."⁵

During the years in issue, 1981 through 1985, petitioner continued to hunt, mount, and place animals in the building behind his house. The animals were never removed from the building.

During the years 1981, 1982, and 1983, no State official accepted the donations which petitioner claims to have made in each of those respective years. When Governor Edwards resumed being Governor in March 1984, the State had no record of the donations which petitioner claimed to have made during these years. During the period between March 1981 and March 1984, petitioner unsuccessfully attempted to contact Louisiana Governor Treen about the animal trophies which he intended to give to the State.

Sometime prior to February 16, 1984, respondent began examining petitioner's deductions for the alleged donations. Respondent requested an opinion from the Louisiana Attorney General's office on whether petitioner had made a valid donation of the trophies under Louisiana law. Respondent provided the Attorney General with a copy of the letter from Governor Edwards dated January 9, 1980. On July 6, 1984, the Attorney General informed respondent that, based on the information provided by respondent, petitioner had not made a valid donation to the State.

Governor Edwards was reelected Governor of Louisiana and took office in March 1984. On December 29, 1984, petitioner and Governor Edwards executed a notarized document entitled "Donation Inter Vivos." In this document, petitioner states, under oath, that he donated various trophies during the years 1979 through 1983 to the State and that the State accepted the donations. The document also states that because the State was unable to store the trophies, it requested that petitioner "maintain the property until appropriate facilities were acquired and made available."⁶ The document lists the trophies which petitioner claims he donated to the State during the years 1979, 1981, 1982, and 1983. The document does not state how the donations were made or who accepted the donations on behalf of the State during those respective years, nor does it give specific dates on which the purported donations were made. On December 30, 1985, the same parties executed a...