Tax Court Denies Charitable Deduction for Home Demolished by Fire Department in Training Exercise

The Tax Court yesterday held that held a married couple could not claim a charitable contribution deduction for a house that they donated to a local fire department for training purposes because they failed to prove that the fair market value of the house exceeded the benefit they received by having the fire department burn down the house. But the Tax Court held that the couple was not liable for the accuracy-related penalty because they acted reasonably and in good faith. Rolfs v. Commissioner, 135 T.C. No. 24 (Nov. 4, 2010). Prior TaxProf Blog coverage:

• IRS Burns Kirk Herbstreit's Donation of Home to Fire Department (July 24, 2009)
• IRS Denies Deduction for Homes Donated to Fire Departments and Burned Down (Sept. 26, 2009)
• Court Denies Charitable Deduction for Donation of Home to Fire Department (July 26, 2010)
• Oregon Gubernatorial Race Roiled by Candidate's Charitable Deduction for Donation of Home to Fire Department (Oct. 7, 2010)