Donor Control of Charity Does Not Thwart Deduction

In Foxworthy Inc. v. Commissioner, the IRS denied, along with numerous other unrelated claimed deductions, hundreds of thousands of dollars in charitable contribution contributions in part because the individual donors controlled the recipient charity, the Bell Family Foundation (see pages 12-13 of the opinion).  The court flatly rejected the denial on these grounds, finding no authority supporting the position “that merely having control over the foundation disqualifies [the taxpayers] from claiming the charitable contribution deductions” (page 66 of the opinion).  While the conclusion is not surprising, the fact that the IRS would argue that a charitable contribution deduction should be denied on these grounds is troubling. 

(Hattip:  Christopher Hoyt)

LHM