The Court has Spoken, the Letter of the Law has Trumped Reason


A practical update on charitable contributions

In an earlier Pottscast ™, we related some of the rules that the law imposes in order to be able to deduct a charitable contribution. One of those rules is that for contributions exceeding $250, the giver must obtain from the charitable organization a “contemporaneous written acknowledgment containing the amount of the contribution and other required information concerning the terms of the gift.”

In a decision handed down in 2012, in Durden v. Commissioner, the Tax Court ruled that Mr. and Mrs. Durden, of Texas, were not entitled to deduct the $22,517 they contributed to their church, Nevertheless Community Church (NCC).The IRS ruled that the Durdens, although they had provided records of their contributions, including copies of canceled checks and a letter from NCC dated January 10, 2008, which acknowledged contributions from them during 2007 totaling $22,517, were not entitled to the deduction.

The IRS Simplifies the Home Office Deduction

homeofficedeductionIt doesn’t occur very often, but occasionally the IRS makes a change which actually is a simplification.  This may make you think of President Reagan’s famous quote “The nine most terrifying words in the English language are ‘I’m from the government, and I’m here to help.’  But this change is one which, for many taxpayers, will save them at a minimum a little time, and in some cases tax dollars.

You may be aware that the tax law allows a taxpayer a “Home Office Deduction,” if they use a part of their home “regularly and exclusively” for conducting business. The rules require that you must show that you use your home as your principal place of business, but even if you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction.