Academic journal article Journal of Accountancy

Estate Tax Charitable Deduction Fails Due to Lack of Certainty

Academic journal article Journal of Accountancy

Estate Tax Charitable Deduction Fails Due to Lack of Certainty

Article excerpt

Dr. Marine's will left the residue of his estate to two universities in equal shares. The will also gave his personal representatives the discretion to give people they felt had been "helpful to [Marine] during [his] lifetime" up to 1% of the gross probate estate (which totaled $2.6 million) each. The number of people to whom gifts could be made was unlimited.

After Marine's death, the personal representatives chose two individuals to receive gifts totaling $25,000. The estate tax return reported a $2.1 million charitable deduction--the amount of the residuary bequest to the two schools.

The IRS's audit report questioned the charitable deduction. Subsequently, the estate asked a local probate court to approve the two gifts. The probate court did so and ordered no further gifts be made under the provision.

The Tax Court disallowed the charitable deduction. Under applicable case law, to be deductible the amount of a charitable bequest must be fixed and able to be stated as a definite sum of money at the date of death. …

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