Opinion
Docket No. 28349–81.
1984-06-6
ELDON D. BRINLEY AND MARY ALICE BRINLEY, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Wilford W. Kirton, Jr., for the petitioners. Richard M. Elliott, for the respondent.
In Brinley v. Commissioner, T.C. Memo. 1983–408, we held that petitioners were not entitled to a charitable contribution deduction under sec. 170, I.R.C. 1954, for amounts paid to a church-designated travel agent for their son's travel to a site of missionary service and for amounts paid directly to their son to sustain him while he served as a missionary for the Church of Jesus Christ of Latter-Day Saints. Petitioners timely filed a motion for reconsideration claiming, inter alia, that the subsequently issued opinion of the Tenth Circuit Court of Appeals in White v. United States, 725 F.2d 1269 (10th Cir. 1984), is contrary to the holding in our original opinion. We granted petitioners' motion. Held, we reaffirm our original opinion. Petitioners are not entitled to a charitable contribution deduction under sec. 170 because their contributions did not satisfy the control requirement. Wilford W. Kirton, Jr., for the petitioners. Richard M. Elliott, for the respondent.
SUPPLEMENTAL OPINION
DAWSON, Chief Judge:
This case is before us on petitioners' motion for reconsideration of our opinion in the above-entitled case (hereinafter referred to as “ Brinley I”), T.C. Memo. 1983–408. Under the facts of this case Eldon D. and Mary Alice Brinley (petitioners) paid a total of $942 in 1977 to a church-designated travel agent for their son's travel to a site of missionary service and directly to their son to sustain him while he served as a missionary for the Church of Jesus Christ of Latter-Day Saints (hereinafter referred to as “LDS Church”). Petitioners claimed a charitable contribution deduction in the amount of $942 on their Federal income tax return for the taxable year 1977.
The issue before us in Brinley I was whether petitioners were entitled to a charitable contribution deduction under section 170 for the $942 paid by them directly to the travel agent and their son. We held that petitioners were not entitled to deduct these amounts. Our holding was based on the fact that neither petitioners' son nor the travel agent was a qualified recipient of charitable contributions under section 170. Moreover, since the funds were given directly to petitioners' son for his personal use and could be expended by their son as he wished without accounting to anyone, petitioners' contributions did not satisfy the control requirement as articulated in Peace v. Commissioner, 43 T.C. 1, 7–8 (1964). Furthermore, as a result of the funds not being contributed to an official of the charitable organization we found the decision in Winn v. Commissioner, 595 F.2d 1060 (5th Cir. 1979), affg. in part, revg. on this issue 67 T.C. 499 (1976), to be distinguishable.
The granting of a motion for reconsideration rests within the discretion of the Court. Such a motion is generally denied unless unusual circumstances or substantial error is shown. Haft Trust v. Commissioner, 62 T.C. 145 (1974), affd. on this issue 510 F.2d 43, 45 n.1 (1st Cir. 1975). In this case we granted petitioners' motion because the subsequently issued opinion of the Court of Appeals in White v. United States, 725 F.2d 1269 (10th Cir. 1984), is contrary to the holding in our original opinion, and White is factually indistinguishable from Brinley I.
A taxpayer is allowed a deduction for any contribution “to or for the use of” a qualified religious organization. Sec. 170(c)(2)(B). A taxpayer is also allowed a charitable contribution deduction for “unreimbursed expenditures made incident to the rendition of services” to a qualified donee. Sec. 1.170A-1(g), Income Tax Regs.; Upham v. Commissioner, 16 B.T.A. 950 (1929); Wolfe v. McCaughn, 5 F.Supp. 407 (E.D. Pa. 1933).
It is undisputed by the parties that the LDS Church is a qualified donee under section 170(c) and is listed in the Internal Revenue Service Publication No. 78, Cumulative List of Organizations. In Brinley I we found that petitioners had unreimbursed expenditures of $942 in order to sustain their son as a LDS Church missionary. We also found that petitioners' son rendered full-time services as a LDS Church missionary.
Respondent asserts that petitioners are not entitled to a charitable contribution deduction under section 1.170A-1(g), Income Tax Regs., because petitioners did not personally render any services to the LDS Church. Respondent also asserts that the control requirement is a necessary test for the deductibility of contributions where, as here, the parents have the ability to channel funds to their son for the son's personal use ostensibly as a charitable contribution.
Petitioners contend, however, that the amounts paid by them were “incident to” charitable services because the expenditures were generated by their son's rendition of substantial and valuable services to the LDS Church as a missionary. Therefore, petitioners contend, the expenses are expressly deductible under section 1.170A-1(g), Income Tax Regs.
Petitioners maintain that charitable service-related expenses are deductible regardless of the personal or family nature of the expenses. In support of this contention, petitioners note that section 1.262–1(b)(5) and (c)(5), Income Tax Regs., clearly states that expenses deductible under section 1.170A-1(g), Income Tax Regs., are not subject to the restrictions of section 262. Petitioners also contend that this Court's reliance in Brinley I upon the church's control of the funds as a prerequisite to deductibility was inappropriate.
When faced with the same issue on facts that are indistinguishable from those in Brinley I, the United States Court of Appeals for the Tenth Circuit recently ruled that
[w]e disagree with Brinley. We see no rational basis for distinguishing the payment of the expenses of a dependent son from the payment of a taxpayer's own expenses to perform the same services. [White v. United States, 725 F.2d at 1271.]
The Tenth Circuit fashioned the following rule of law:
[t]he proper test, we hold, is the same as when the expenditure is for expenses personally incurred—whether the primary purpose is to further the aims of the charitable organization or to benefit the person whose expenses are being paid. When the payment is for part of the costs of necessary travel and for all of the living expenses of a dependent member of taxpayers' household serving as a full-time church missionary away from home we have no difficulty concluding that the expenditure is deductible because the expenditure primarily serves the church. [725 F.2d at 1272.]
An appeal from this decision would lie in the United States Court of Appeals for the Fifth Circuit. Consequently, we are not constrained by the Golsen rule to apply the principle of law enunciated by the Tenth Circuit in the White case. Nonetheless, we think it important to fully consider the opinion in White.