Skripak v. Comm'r of Internal Revenue
| Decision Date | 26 February 1985 |
| Docket Number | 5914-79,11391-79,16214-79,16215-79,Docket Nos. 745-79,6101-80,17479-79,15040-79,15667-79,8009-80.,6178-80 |
| Parties | RICHARD A. SKRIPAK AND RENEE K. SKRIPAK, ET AL., 1 Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
Ps participated in a charitable contributions tax shelter program involving scholarly reprint books. Ps executed a series of documents purporting to evidence the purchase of these reprint books at a cost of one-third of the publisher's catalog retail list prices and the contribution slightly more than six months later (the applicable capital gains holding period) of these books to small rural public libraries qualified to receive deductible contributions. Sec. 170(c), I.R.C. 1954. Ps claimed deductions for these ‘charitable contributions‘ in the amount of the publisher's catalog retail list prices, i.e., three times what they had paid for their ‘subscriptions‘ to the book contribution program.
HELD, the transaction was not a sham. Ps purchased reprint books and contributed those books to qualified donees and are entitled to charitable contributions deductions for the fair market value of the donated books. Sec. 170, I.R.C. 1954, sec. 1.170A-1(c)(1), Income Tax Regs.
HELD FURTHER, the fair market value of the donated books is no more than 20 percent of the publisher's catalog retail list price (approximately 60 percent of what Ps paid for their subscriptions to the book contribution program), and Ps' charitable contributions deductions are limited to that lower figure. CHARLES E. ELROD, JR., DAVID G.PHILLIPS, and STEPHEN D. FROMANG, for the petitioners in docket No. 745-79.
EDGAR E. NEELY, JR., pro se and for the co-petitioner in docket No. 11391-79.Petitioners.
CHARLES E. ELROD, JR., and DAVID G. PHILLIPS, for the petitioners in docket Nos. 5914-79, 15040-79, 15667-79, 16214-79, 16215-79, 17479-79, 6101-80, 6178-80, and 8009-80. Petitioners.STUART B. KALB and LOURDES DeSANTIS, for the respondent.PARKER, JUDGE:
Respondent has determined the following deficiencies in these petitioners' Federal income taxes:
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¦Taxpayer(s) ¦Docket No.¦Year(s)¦Deficiency ¦
+-------------------------+----------+-------+-----------------------¦
¦Richard A. Skripak ¦745-79 ¦1975 ¦$4,480.30 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Renee K. Skripak ¦ ¦ ¦(increased to $6,820 ¦
+-------------------------+----------+-------+-----------------------¦
¦ ¦ ¦ ¦by amendment to answer)¦
+-------------------------+----------+-------+-----------------------¦
¦William Frank McCall, Jr.¦5914-79 ¦1975 ¦4,857.00 ¦
+-------------------------+----------+-------+-----------------------¦
¦ ¦ ¦ ¦(increased to $9,846 ¦
+-------------------------+----------+-------+-----------------------¦
¦ ¦ ¦ ¦by amendment to answer)¦
+-------------------------+----------+-------+-----------------------¦
¦Edgar A. Neely, Jr., ¦11391-79 ¦1975 ¦14,560.54 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Ruth N. Neely ¦ ¦1976 ¦16,675.36 ¦
+-------------------------+----------+-------+-----------------------¦
¦Estate of Archer B. ¦15040-79 ¦1975 ¦42,040.37 ¦
+-------------------------+----------+-------+-----------------------¦
¦Glenn, Jr. ¦ ¦ ¦ ¦
+-------------------------+----------+-------+-----------------------¦
¦Thomas S. Wallace ¦15667-79 ¦1975 ¦16,208.10 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Martha Wallace ¦ ¦ ¦ ¦
+-------------------------+----------+-------+-----------------------¦
¦J.W. Lynn, Jr., ¦16214-79 ¦1976 ¦7,911.00 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Nancy C. Lynn ¦ ¦ ¦ ¦
+-------------------------+----------+-------+-----------------------¦
¦Matt B. Russ ¦16215-79 ¦1975 ¦4,963.93 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Frances R. Russ ¦ ¦ ¦ ¦
+-------------------------+----------+-------+-----------------------¦
¦H.C. McDermid ¦17479-79 ¦1975 ¦11,498.00 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Mary Jo McDermid ¦ ¦1976 ¦14,785.00 ¦
+-------------------------+----------+-------+-----------------------¦
¦ ¦ ¦1977 ¦3,130.00 ¦
+-------------------------+----------+-------+-----------------------¦
¦Lovic A. Brooks, Jr., ¦6101-80 ¦1975 ¦15,074.00 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Carrie Brooks ¦ ¦1976 ¦7,290.00 ¦
+-------------------------+----------+-------+-----------------------¦
¦W. Henry Maddox ¦6178-80 ¦1975 ¦12,371.65 ¦
+-------------------------+----------+-------+-----------------------¦
¦and Helen G. Maddox ¦ ¦1976 ¦12,764.74 ¦
+-------------------------+----------+-------+-----------------------¦
¦C.H. Smith ¦8009-80 ¦1975 ¦23,509.50 ¦
+-------------------------+----------+-------+-----------------------¦
¦ ¦ ¦1976 ¦23,140.00 ¦
+--------------------------------------------------------------------+
These consolidated cases involve taxpayers who participated in a charitable contributions tax shelter program through which they purportedly purchased scholarly reprint books, held them for slightly more than six months, and then contributed them to various small rural public libraries. These taxpayers deducted charitable contributions in amounts of approximately thee times what they purportedly paid for the books. The issues for decision are whether these taxpayers are entitled to deductions for charitable contributions under section 170, 2 and, if so, the amounts of the allowable deductions. 3
Some of the facts have been stipulated and are so found. The several stipulations of fact and exhibits attached thereto are incorporated herein by this reference.
Petitioner William Frank McCall (McCall), docket No. 5914-79, resided in Moultrie, Georgia, at the time he filed his petition in this case. Petitioners Edgar A. Neely, Jr. (Neely) and Ruth N. Neely (collectively the Neelys - docket No. 11391-79), J.W. Lynn, Jr. (Lynn) and Nancy C. Lynn (collectively the Lynns - docket No. 16214-79), and W. Henry Maddox (Maddox) and Helen G. Maddox (collectively the Maddoxes - docket No. 6178-80) all resided in Atlanta, Georgia, at the time they filed their respective petitions in these cases. Petitioners H.C. McDermid (McDermid) and Mary Jo McDermid (collectively the McDermids - docket No. 17479-79) resided in Fort Pierce, Florida, at the time they filed their petition in this case. The Neelys, Lynns, McDermids, and Maddoxes filed their respective joint Federal income tax returns for their years involved, and McCall filed his 1975 individual Federal income tax return, with the Internal Revenue Service Center at Chamblee, Georgia. All of these petitioners used the cash receipts and disbursements method of accounting. When they filed their respective petitions, the other petitioners had their residences at the following locations:
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¦Petitioners ¦Docket No.¦Residence ¦
+-----------------------------------+----------+------------------¦
¦Richard A. Skripak ¦745-79 ¦Fort Pierce, FL ¦
+-----------------------------------+----------+------------------¦
¦and Renee K. Skripak ¦ ¦ ¦
+-----------------------------------+----------+------------------¦
¦Estate of Archer B. Glenn, ¦15040-79 ¦Winston-Salem, NC ¦
+-----------------------------------+----------+------------------¦
¦Jr., Deceased, Wachovia ¦ ¦ ¦
+-----------------------------------+----------+------------------¦
¦Bank & Trust Co., N.A., Executor4 ¦ ¦ ¦
+-----------------------------------+----------+------------------¦
¦Thomas S. Wallace ¦15667-79 ¦Charlotte, NC ¦
+-----------------------------------+----------+------------------¦
¦and Martha Wallace ¦ ¦ ¦
+-----------------------------------+----------+------------------¦
¦Matt B. Russ ¦16215-79 ¦Mendham, NJ ¦
+-----------------------------------+----------+------------------¦
¦and Frances R. Russ ¦ ¦ ¦
+-----------------------------------+----------+------------------¦
¦Lovic A. Brooks, Jr., ¦6101-80 ¦Atlanta, GA ¦
+-----------------------------------+----------+------------------¦
¦and Carrie Brooks ¦ ¦ ¦
+-----------------------------------+----------+------------------¦
¦C.H. Smith ¦8009-80 ¦Oliver Springs, TN¦
+-----------------------------------------------------------------+
The cases of McCall, the Lynns, the McDermids, and the Maddoxes have been selected by the parties and tried as the lead cases in these consolidated cases, with the remaining petitioners agreeing to be bound by our determinations in the lead cases. 5 Unless otherwise indicated, the term ‘petit...
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