Wednesday, May 30, 2012
Joseph Mohamed, a prominent Sacramento real estate broker, certified real estate appraiser, and entrepreneur, and his wife donated six properties worth at least $18.5 million to a charitable remainder trust in 2003 and 2004, but failed to read the instructions to Form 8283 (Noncash Charitable Contributions). Although the Tax Court acknowledgef that "the property was quite likely more valuable than the Mohameds reported on their tax returns," the Tax Court denied the claimed charitable deduction for failure to comply with the substantiation requirements. Mohamed v. Commissioner, T.C. Memo. 2012-152 (May 29, 2012):
We recognize that this result is harsh—a complete denial of charitable deductions to a couple that did not overvalue, and may well have undervalued, their contributions—all reported on forms that even to the Court's eyes seemed likely to mislead someone who didn't read the instructions. But the problems of misvalued property are so great that Congress was quite specific about what the charitably inclined have to do to defend their deductions, and we cannot in a single sympathetic case undermine those rules.
For more, see here. (Hat Tip: Bob Kamman.)