Section 170 of the Internal Revenue Code of 1954 permits a
taxpayer to claim a charitable contribution deduction only if the
contribution is made "to or for the use of" a qualified
organization. Petitioner husband and wife, who are members of the
Church of Jesus Christ of Latter-day Saints (Church), claimed such
deductions for funds transferred to their sons while they were
serving as full-time, unpaid missionaries for the Church. The
Church requested the payments, set their amounts, and, through
written guidelines, instructed that they be used exclusively for
missionary work. In accordance with the guidelines, petitioners'
sons used the money primarily to pay for rent, food,
transportation, and personal needs while on their missions. When
the Internal Revenue Service denied petitioners' claim, they filed
suit in the District Court. The court ruled in favor of the
Government, holding that the payments were not "for the use of "
the Church under § 170 because the Church lacked sufficient
possession and control of the funds. The court also rejected
petitioners' alternative claim that the payments were deductible
under Treas.Reg. 1.170 A-1(g) -- which allows the deduction of
"unreimbursed expenditures made incident to the rendition of
services to an organization contributions to which are deductible"
-- on the ground that petitioners were not themselves performing
donated services. The Court of Appeals affirmed.
Held:
1. The funds transferred by petitioners to their sons were not
donated "for the use of " the Church within the meaning of § 170.
Pp.
495 U. S.
478-486.
(a) In choosing the phrase "for the use of," Congress was most
likely referring to donations made to a legally enforceable trust
or a similar legal arrangement. Although, on its face, the quoted
phrase could support any number of meanings, the history of the
statute indicates that Congress added the phrase to § 170 in 1921
for the purpose of overruling the Government's prior interpretation
that a gift to a trust for a charitable purpose was not deductible.
Construing the phrase as referring to a trust or similar
arrangement comports with the accepted meaning in 1921 of "use" as
synonymous with the term "trust." Pp.
495 U.S. 479-482.
(b) Thus, the Service's contemporaneous and longstanding
interpretation that the phrase "for the use of" is intended to
convey a similar
Page 495 U. S. 473
meaning as "in trust for" is consistent with the statutory
language, fully implements Congress' apparent purpose in adopting
it, and must be accepted. Pp.
495 U. S.
482-484.
(c) There is no evidence to support petitioners' contentions
that Congress intended the phrase "for the use of " to be
interpreted as referring to fiduciary relationships in general or
as referring to a type of relationship that gives a qualified
organization a reasonable ability to supervise the use of
contributed funds. Pp.
495 U. S.
484-485.
(d) The record does not support a finding that petitioners
transferred the funds to their sons "in trust for," or through a
similarly enforceable legal arrangement for the benefit of, the
Church. There is no evidence that petitioners took any steps
normally associated with creating a trust or similar legal
arrangement; that the sons had any legal obligation to comply with
their promise to use the money in accordance with the Church's
guidelines; or that the Church might have a legal entitlement to
the money or to a civil cause of action against missionaries using
such money for purposes not approved by the Church. Pp.
495 U. S.
485-486.
2. The transfer of funds by petitioners to their sons was not a
contribution "to" the Church under Treas.Reg. 1.170 A-1(g). The
regulation's plain language indicates that taxpayers may claim
deductions only for "unreimbursed expenditures" incurred in
connection with their own "rendition of services to [a qualified]
organization." Pp.
495 U. S.
486-489.
861 F.2d 558, affirmed.
O'CONNOR, J., delivered the opinion for a unanimous Court.
JUSTICE O'CONNOR delivered the opinion of the Court.
We are called upon in this case to determine whether the funds
petitioners transferred to their two sons while they served as
full-time, unpaid missionaries for the Church of
Page 495 U. S. 474
Jesus Christ of Latter-day Saints (Church) are deductible as
charitable contributions "to or for the use of" the Church,
pursuant to 26 U.S.C. § 170.
Petitioners, Harold and Enid Davis, and their sons, Benjamin and
Cecil, are members of the Church. According to the stipulated
facts, the Church operates a worldwide missionary program involving
25,000 persons each year. Most of these missionaries are young men
between ages 19 and 22. If the Church determines that a candidate
is qualified to become a missionary, the president of the Church
sends a letter calling the candidate to missionary service in a
specified geographical location. A follow-up letter from the
missionary department lists the items of clothing the missionary
will need, provides specific information relating to the mission,
and sets forth the estimated amount of money needed to support the
missionary service. This amount varies according to the location of
the mission and reflects an estimate of the amount the missionary
will actually need.
The missionary's parents generally provide the necessary funds
to support their son or daughter during the period of missionary
service. If they are unable to do so, the Church will locate
another donor from the local congregation or use money donated to
the Church's general missionary funds. The Church believes that
having individual donors send the necessary funds directly to the
missionary benefits the Church in several important ways.
Specifically, it "fosters the Church doctrine of sacrifice and
consecration in the lives of its people" as well as reducing the
administrative and bookkeeping requirements which would otherwise
be imposed upon the Church. App. to Pet. for Cert. 32a.
After accepting the call, the missionary candidate receives
priesthood ordinances to serve as an official missionary and
minister of the Church. During the missionary service, the mission
president (leader of the mission) controls many aspects
Page 495 U. S. 475
of the missionaries' lives, including the manner of dress and
grooming. Missionaries are required to conform to a daily schedule
which calls for at least 10 hours per day of actual missionary work
in addition to study time, mealtime, and planning time. Mission
rules forbid dating, movies, plays, certain sports, and other
activities; missionaries are not allowed to take vacations or
travel for personal purposes.
Missionaries receive some supervision over their use of funds.
The Missionary Handbook instructs missionaries that
"[t]he money you receive for your support is sacred and should
be spent wisely and only for missionary work. Keep expenses at a
minimum. . . . Keep a financial record of all expenditures."
App. 13. The mission presidents give similar instructions to the
missionaries under their supervision. Although missionaries are not
required to obtain advance approval of each expenditure they make
from their personal checking account, they do submit weekly reports
to their group leader listing the amount of time spent in Church
service, the type of missionary work accomplished, and a report of
the total expenses for the week and month to date. If a missionary
begins to accumulate surplus funds, he is expected to take action
to reduce the amount of donations sent to him. The mission
president may alter his estimates of the amounts required each
month to take into account changing circumstances.
Benjamin and Cecil Davis both applied to become missionaries. In
1979, the Church notified Benjamin by letter that he had been
called to missionary service at the New York Mission. A second
letter informed him of the estimated amount of money which would be
needed to support his service. In 1980, Cecil Davis was notified
that he had been called to missionary service at the New
Zealand-Cook Island Mission. Cecil also received a second letter
informing him about the mission and the amount of money he would
need. Petitioners notified their bishop that they would provide the
funds requested by the Church to meet their sons' mission
Page 495 U. S. 476
expenses. According to petitioners, both sons made a commitment
with them to use the money only in accordance with the Church's
instructions.
Petitioners transferred to Benjamin's personal checking account,
on which he was the sole authorized signatory, $3,480.89 in 1980
and $4,135 in 1981. During 1981, petitioners transferred $1,518 to
Cecil's personal checking account, on which he was the sole
authorized signatory. Benjamin and Cecil used this money primarily
to pay for rent, food, transportation, and personal needs while on
their missions. Benjamin also spent approximately $20 per month to
purchase religious tracts and other materials used during his
missionary work. Neither Benjamin nor Cecil was required to or
sought specific approval of each expenditure made from his personal
checking account. However, each week, Benjamin and Cecil submitted
a report of the total expenses for the week and month to date. At
the end of their service, Cecil had no money remaining in his
account; Benjamin had $150 which he used to purchase a camera.
(Petitioners do not claim a deduction for this amount.)
In their joint tax returns filed in 1980 and 1981, petitioners
claimed their sons as dependents, but did not claim a charitable
contribution deduction under 26 U.S.C. § 170 for the funds sent
their sons during their missionary service. On April 16, 1984,
petitioners filed an amended income tax return for the years 1980
and 1981, claiming additional charitable contributions of the
$3,480.89 and $4,882 paid to their sons during the missionary
service. In January, 1985, the Internal Revenue Service disallowed
the refunds. Petitioners filed a refund suit in the United States
District Court for the District of Idaho. In September, 1986,
petitioners filed a second set of amended returns, limiting their
charitable deductions to the amounts indicated by the Church and
correcting the number of dependents claimed for each year.
In District Court, petitioners and the United States both moved
for summary judgment.
664 F.
Supp. 468 (Idaho
Page 495 U. S. 477
1987). Petitioners argued that the payments they made to support
their sons' missionary services were charitable contributions "for
the use of" the Church. Alternatively, they claimed the payments
were deductible under Treas.Reg. 1.170A-1(g), 26 CFR § 1.170A-1(g)
(1989), which allows the deduction of "unreimbursed expenditures
made incident to the rendition of services to an organization
contributions to which are deductible." The District Court ruled in
favor of the United States. It rejected petitioners' claimed
deduction for unreimbursed expenditures because petitioners were
not themselves performing donated services, and it held that
petitioners' payments to their sons were not "for the use of " the
Church because the Church lacked sufficient possession and control
of the funds. 664 F. Supp. at 471-472.
The Court of Appeals for the Ninth Circuit affirmed. 861 F.2d
558 (1988). The Court of Appeals rejected petitioners' claim that
the transferred funds were deductible contributions because they
conferred a benefit on the Church.
Id. at 561. Instead,
the Court of Appeals held that contributions are deductible only
when the recipient charity exercises control over the donated
funds.
Id. at 562. The Court of Appeals reasoned that the
beneficiary of a charitable contribution must be indefinite,
see Russell v. Allen, 107 U. S. 163,
107 U. S. 167
(1883), and that this requirement cannot be met when the taxpayer
makes a contribution directly to the intended beneficiary. In this
case, the Court of Appeals concluded that the Church lacked actual
control over the disposition of the funds, and thus they were not
deductible. 861 F.2d at 562. The Court of Appeals agreed with the
District Court that § 1.170A-1(g) did not apply to petitioners, as
the regulation permits a deduction for unreimbursed expenses only
by the taxpayer who performed the charitable service.
Id.
at 564.
Because the Court of Appeals' decision conflicted with
White
v. United States, 725 F.2d 1269, 1270-1272 (CA10 1984), and
Brinley v. Commissioner, 782 F.2d 1326, 1336
Page 495 U. S. 478
(CA5 1986), we granted certiorari, 493 U.S. 953 (1990), and now
affirm.
II
Under § 170 of the Internal Revenue Code of 1954, 68A Stat. 58,
as amended, 26 U.S.C. § 170 (1982 ed.), a taxpayer may claim a
deduction for a charitable contribution only if the contribution is
made "to or for the use of" a qualified organization. This section
provides, in pertinent part:
"(a) Allowance of deduction."
"(1) General rule. -- There shall be allowed as a deduction any
charitable contribution (as defined in subsection (c)) payment of
which is made within the taxable year. A charitable contribution
shall be allowable as a deduction only if verified under
regulations prescribed by the Secretary."
"
* * * *"
"(c) Charitable contribution defined. -- For purposes of this
section, the term 'charitable contribution' means a contribution or
gift
to or for the use of -- "
"
* * * *"
"(2) A corporation, trust, or community chest, fund, or
foundation -- "
"
* * * *"
"(B) organized and operated exclusively for religious,
charitable, scientific, literary, or educational purposes. . .
."
(Emphasis added.)
Petitioners contend that the funds they transferred to their
sons' accounts are deductible as contributions "for the use of" the
Church. Alternatively, petitioners claim these funds are
unreimbursed expenditures under Treasury Regulation § 1.170A-1(g)
and therefore are deductible as contributions "to" the Church.
495 U. S. S. 479�
at issue here are "for the use of " the Church within the meaning
of § 170.
On its face, the phrase "for the use of" could support any
number of different meanings.
See, e.g., Webster's New
International Dictionary (2d ed.1950) ("use" defined in general
usage as "to convert to one's service"; "to employ"; or, in law,
"use imports a trust" relationship). Petitioners contend that the
phrase "for the use of" must be given its broadest meaning as
describing
"the entire array of fiduciary relationships in which one person
conveys money or property to someone else to hold or employ in some
manner for the benefit of a third person."
Brief for Petitioners 17. Under this reading, no legally
enforceable relationship need exist between the recipient of the
donated funds and the qualified donee; in effect, any intermediary
may handle the funds in any way that would arguably benefit a
charitable organization, regardless of how indirect or tangential
the benefit might be. Petitioners also advance a second, somewhat
narrower interpretation, specifically that a contribution is "for
the use of" a qualified organization within the meaning of § 170 so
long as the donee has "a reasonable ability to ensure that the
contribution primarily serves the organization's charitable
purposes."
Id. at 26. In this case, petitioners argue that
their payments at least meet this second interpretation. They point
to the Church's role in requesting the funds, setting the amount to
be donated, and requiring weekly expense sheets from the
missionaries. The Service, on the other hand, has historically
defined "for the use of " as conveying "a similar meaning as
in
trust for.'" See, e.g., I.T. 1867, II-2 Cum.Bull. 155
(1923).
Although the language of § 170 would support the interpretation
of either the Service or petitioners, the events leading to the
enactment of the 1921 amendment adding the phrase "for the use of"
to § 170 indicate that Congress had a specific meaning of "for the
use of " in mind. The original version of § 170, promulgated in the
War Revenue Act of 1917, ch. 63, § 1201(2), 40 Stat. 330, did not
allow deductions for gifts "for
Page 495 U. S. 480
the use of " a qualified donee. Rather, it allowed individuals
to deduct only
"[c]ontributions or gifts . . . to corporations or associations
organized and operated exclusively for religious, charitable,
scientific, or educational purposes. . . ."
In interpreting this provision in the Act (and in the subsequent
Revenue Act of 1918, ch. 18, § 214(a)(11), 40 Stat. 1068), the
Bureau of Internal Revenue stated that
"[c]ontributions to a trust company (a corporation) in trust to
invest and disburse them for a charitable purpose are not allowable
deductions under [§ 170]."
O.D. 669, 3 Cum.Bull. 187 (1920). In hearings before the Senate
Committee on Finance on the proposed Revenue Act of 1921,
representatives of charitable foundations requested an amendment
making gifts to trust companies and similar donees deductible even
though a trustee, rather than a charitable organization, held legal
title to the funds. Hearings on Proposed Revenue Act of 1921 before
the Senate Committee on Finance, 67th Cong., 1st Sess., 521 (1921).
Testimony before the Committee indicated that numerous communities
had established charitable trusts, charitable foundations, or
community chests so that individuals could donate money to a
trustee who held, invested, and reinvested the principal, and then
turned the principal over to a committee that distributed the funds
for charitable purposes.
Id. at 522-526;
see also
H.R.Rep. No. 350, 67th Cong., 1st Sess., 12 (1921) (House Comm. on
Ways and Means) (amendments "would allow the deduction, under
proper restriction, of contributions or gifts to a community chest
fund or foundation"); S.Rep. No. 275, 67th Cong., 1st Sess., 18
(1921). Responding to these concerns, Congress overruled the
Bureau's interpretation of § 170 [then § 214(a)(11)] by adding the
phrase "for the use of . . . any corporation, or community chest,
fund, or foundation . . ." to the charitable deduction provision of
the Revenue Act of 1921, ch. 136, § 214(a)(11), 42 Stat. 241. In
light of these events, it can be inferred that Congress' use of the
phrase "for the use of" related to its purpose in amending § 170 of
allowing taxpayers
Page 495 U. S. 481
to deduct contributions made to trusts, foundations, and similar
donees. An interpretation of "for the use of " as conveying a
similar meaning as "in trust for" would be consistent with this
goal.
It would have been quite natural for Congress to use the phrase
"for the use of" to indicate its intent of allowing deductions for
donations in trust, as this phrase would have suggested a trust
relationship to the members of the 67th Congress. From the dawn of
English common law through the present, the word "use" has been
employed to refer to various forms of trust arrangements.
See 1 G. Bogert, Trusts and Trustees § 2, p. 9 (1935);
Black's Law Dictionary 1382 (5th ed.1979) ("
Use and
trusts are not so much different things as different
aspects of the same subject. A use regards principally the
beneficial interest; a trust regards principally the nominal
ownership"). In the early part of this century, the word "use" was
technically employed to refer to a passive trust, but less formally
used as a synonym for the word "trust."
See Bogert,
supra, at 9 ("The words
use' and `trust' are employed
as synonyms frequently by writers and judges"); 1 R. Baldes, Perry
on Trusts and Trustees § 298 (7th ed.1929) ("A use, a
trust, and a confidence is one and the same
thing. . ."); 1 Restatement of Trusts §§ 67-72 (Effect of Statute
of Uses) (1935). The phrases "to the use of" or "for the use of"
were frequently used in describing trust arrangements. See,
e.g., United States v. Bowling, 256 U.
S. 484, 486 (1921); Blanset v. Cardin,
256 U. S. 319,
256 U. S. 321
(1921); Rand v. United States, 249 U.
S. 503, 249 U. S. 508
(1919). Given that this meaning of the word "use" precisely
corresponded with Congress' purpose for amending the statute, it
appears likely that, in choosing the phrase "for the use of,"
Congress was referring to donations made in trust or in a similar
legal arrangement.
This understanding is confirmed by the Bureau's initial
interpretation of the phrase. It is significant that, almost
immediately following the amendment of § 170, the Commissioner
Page 495 U. S. 482
interpreted the phrase "for the use of " as "intended to convey
a similar meaning as
in trust for.'" I.T. 1867, II-2 Cum.Bull.
155 (1923). Rejecting a taxpayer's claim that a gift to a volunteer
fire company was deductible as a contribution for the use of the
municipality, the Bureau noted that
"[i]t does not appear that the municipality in any way has any
control over the property of the incorporated volunteer fire
company, or that it has any voice in the manner in which such
property should be used. Upon dissolution of the company, the
property would not escheat to the State. A right of appropriation
or enjoyment of the property of the fire company does not rest in
the municipality."
Ibid. The Service adhered to its interpretation that
"for the use of" conveys "a similar meaning as
in trust for'"
in subsequent rulings permitting taxpayers to deduct the value of
gifts irrevocably transferred to a trust for the benefit of
qualified organizations. See, e.g., Rev.Rul. 55-275,
1955-1 Cum.Bull. 295; Rev.Rul.194, 1953-2 Cum.Bull. 128; I.T. 3707,
1945 Cum.Bull. 114. Numerous judicial decisions have relied on this
interpretation. See, e.g., Rockefeller v. Commissioner,
676 F.2d 35, 40 (CA2 1982); Orr v. United States, 343 F.2d
553, 557-558 (CA5 1965); Thomason v. Commissioner, 2 T.C.
441, 444 (1943); Danz v. Commissioner, 18 T.C. 454, 464
(1952), aff'd on other grounds, 231 F.2d 673 (CA9 1955),
cert. denied, 352 U.S. 828 (1956). Congress' reenactment
of the statute in 1954, using the same language; indicates its
apparent satisfaction with the prevailing interpretation of the
statute. See Cammarano v. United States, 358 U.
S. 498, 358 U. S. 510
(1959); McCaughn v. Hershey Chocolate Co., 283 U.
S. 488, 283 U. S.
492-493 (1931).
The Commissioner's interpretation of "for the use of " thus
appears to be entirely faithful to Congress' understanding and
intent in using that phrase. Moreover, the Commissioner's
interpretation is consistent with the purposes of § 170 as a whole.
In enacting § 170,
"Congress sought to provide tax benefits to charitable
organizations, to encourage the development
Page 495 U. S. 483
of private institutions that serve a useful public purpose or
supplement or take the place of public institutions of the same
kind."
Bob Jones University v. United States, 461 U.
S. 574,
461 U. S. 588
(1983). The Commissioner's interpretation of "for the use of"
assures that contributions will in fact foster such development,
because it requires contributions to be made in trust or in some
similar legal arrangement. A defining characteristic of a trust
arrangement is that the beneficiary has the legal power to enforce
the trustee's duty to comply with the terms of the trust.
See,
e.g., 3 W. Fratcher, Scott on Trusts § 200 (4th ed.1988); 1
Restatement of Trusts § 200 (1935). A qualified beneficiary of a
bona fide trust for charitable purposes would have both the
incentive and legal authority to ensure that donated funds are
properly used. If the trust contributes funds to a range of
charitable organizations so that no single beneficiary could
enforce its terms, the trustee's duty can be enforced by the
Attorney General under the laws of most States.
See 4A W.
Fratcher, Scott on Trusts § 391 (4th ed.1989); G. Bogert, Trusts
and Trustees § 411 (2d ed.1977). Although the Service's
interpretation does not require that the qualified organization
take actual possession of the contribution, it nevertheless
reflects that the beneficiary must have significant legal rights
with respect to the disposition of donated funds.
Petitioners argue that any interpretation of "for the use of"
that requires a qualified donee to have the same degree of control
over contributed funds as a beneficiary would have over a trust
res would make "for the use of" redundant, meaning no more
than "to." We disagree. When Congress amended § 170, it was fully
aware of the Bureau's ruling that the original statutory deduction
for contributions "to" a qualified organization could not be
claimed for contributions made in trust for the organization.
See O.D. 669, 3 Cum.Bull. 187 (1920). Accordingly,
Congress amended the statute specifically to overcome this
interpretation. Moreover, a contribution made in trust for a
charity does not give the charity
Page 495 U. S. 484
immediate possession and control, as does a donation directly to
a charity. Unlike a contribution that must go "to" a qualified
organization, a contribution "for the use of" a donee may go to a
trustee with the discretion to select among a number of qualified
donees to whom the funds may be disbursed.
See, e.g., Bowman v.
Commissioner, 16 B.T.A. 1157, 1163-1164 (1929). Furthermore, a
taxpayer may generally claim an immediate deduction for a gift to a
trustee, even though receipt of the gift by the charity is delayed.
Recognizing this characteristic of gifts in trust, Congress further
amended § 170 in 1964 in order to encourage donations "to" a
charity, because donations "in trust for" a charity "often do not
find their way into operating philanthropic endeavors for extended
periods of time." S.Rep. No. 830, 88th Cong., 2d Sess., 59-60
(1964).
Although the Service's interpretive rulings do not have the
force and effect of regulations,
see Bartels v.
Birmingham, 332 U. S. 126,
332 U. S. 132
(1947), we give an agency's interpretations and practices
considerable weight where they involve the contemporaneous
construction of a statute and where they have been in long use.
See, e.g., Norwegian Nitrogen Products Co. v. United
States, 288 U. S. 294,
288 U. S. 315
(1933). Under the circumstances presented here, we think there is
good reason to accept the Service's interpretation of "for the use
of" The denial of deductions for donations in trust that prompted
Congress to amend § 170, the accepted meaning of "use" as
synonymous with the term "trust," and the Service's contemporaneous
and longstanding construction of § 170 constitute strong evidence
in favor of this interpretation.
Although the language of the statute may also bear petitioners'
interpretation, they have failed to establish that their
interpretation is compelled by the statutory language. To the
contrary, there is no evidence that Congress intended the phrase
"for the use of" to be interpreted as referring to fiduciary
relationships in general or as referring to a type of relationship
that gives a qualified organization a reasonable ability
Page 495 U. S. 485
to supervise the use of contributed funds. Rather, as noted
above, there are strong indications that Congress intended a more
specific meaning. Moreover, petitioners' interpretations would tend
to undermine the purposes of § 170 by allowing taxpayers to claim
deductions for funds transferred to children or other relatives for
their own personal use. Because a recipient of donated funds need
not have any legal relationship with a qualified organization, the
Service would face virtually insurmountable administrative
difficulties in verifying that any particular expenditure benefited
a qualified donee.
Cf. § 170(a)(1). Although there is no
suggestion whatsoever in this case that the transferred funds were
used for an improper purpose, it is clear that petitioners'
interpretation would create an opportunity for tax evasion that
others might be eager to exploit.
See, e.g., Scialataba,
Kurtzman, & Steinhart, Mail-Order Ministries Under the Section
170 Charitable Contribution Deduction: The First Amendment
Restrictions, the Minister's Burden of Proof, and the Effect of TRA
'86, 11 Campbell L.Rev. 1 (1988); Note, "I Know It When I See It":
Mail-Order Ministry Tax Fraud and the Problem of a Constitutionally
Acceptable Definition of Religion, 25 Am.Crim.L.Rev. 113 (1987). We
need not determine whether petitioners' interpretation of "for the
use of" would have been a permissible one had the Service decided
to adopt it, though we note that the Service may retain some
flexibility to adopt other interpretations in the future. It is
sufficient to decide this case that the Service's longstanding
interpretation is both consistent with the statutory language and
fully implements Congress' apparent purpose in adopting it.
Accordingly, we conclude that a gift or contribution is "for the
use of" a qualified organization when it is held in a legally
enforceable trust for the qualified organization or in a similar
legal arrangement.
Viewing the record here in the light most favorable to
petitioners, as we must after a grant of summary judgment for the
United States, we discern no evidence that petitioners
Page 495 U. S. 486
transferred funds to their sons "in trust for" the Church. It is
undisputed that petitioners transferred the money to their sons'
personal bank accounts on which the sons were the sole authorized
signatories. Nothing in the record indicates that petitioners took
any steps normally associated with creating a trust or similar
legal arrangement. Although the sons may have promised to use the
money "in accordance with Church guidelines,"
see App. to
Pet. for Cert. 36a, they did not have any legal obligation to do
so; there is no evidence that the guidelines have any legally
binding effect. Nor does the record support the assertion,
see Tr. of Oral Arg.19-20, that the Church might have a
legal entitlement to the money or a civil cause of action against
missionaries who used their parents' money for purposes not
approved by the Church. We conclude that, because petitioners did
not donate the funds in trust for the Church, or in a similarly
enforceable legal arrangement for the benefit of the Church, the
funds were not donated "for the use of" the Church for purposes of
§ 170.
III
Petitioners contend, in the alternative, that their transfer of
funds into their sons' account was a contribution "to" the Church
under Treas.Reg. § 1.170A-1(g), 26 CFR § 1.170A-1(g) (1989), which
provides:
"
Contributions of services. No deduction is allowable
under section 170 for a contribution of services. However,
unreimbursed expenditures made incident to the rendition of
services to an organization contributions to which are deductible
may constitute a deductible contribution. For example, the cost of
a uniform without general utility which is required to be worn in
performing donated services is deductible. Similarly, out-of-pocket
transportation expenses necessarily incurred in performing donated
services are deductible. Reasonable expenditures for meals and
lodging necessarily incurred while away from home in the course of
performing
Page 495 U. S. 487
donated services also are deductible. For the purposes of this
paragraph, the phrase 'while away from home' has the same meaning
as that phrase is used for purposes of section 162 and the
regulations thereunder."
Petitioners assert that this regulation allows them to claim
deductions for their sons' unreimbursed expenditures incident to
their sons' contribution of services. We disagree. The plain
language of § 1.170A-1(g) indicates that taxpayers may claim
deductions only for expenditures made in connection with their own
contributions of service to charities. Unless there is a specific
statutory provision to the contrary, a taxpayer ordinarily reports
his own income and takes his own deductions.
See, e.g.,
Commissioner v. Culbertson, 337 U. S. 733,
337 U. S.
739-740 (1949) ("[T]he first principle of income
taxation [is] that income must be taxed to him who earns it");
New Colonial Ice Co. v. Helvering, 292 U.
S. 435,
292 U. S.
440-441 (1934) ("[T]axpayer who sustain[s] the loss is
the one to whom the deduction shall be allowed"). Section
1.170A-1(g) is thus most naturally read as referring to the
individual taxpayer, who may deduct only those "unreimbursed
expenditures" incurred in connection with the taxpayer's own
"rendition of services to [a qualified] organization." This
interpretation of the regulation is consistent with the Revenue
Ruling that was the precursor to § 1.170A-1(g).
See
Rev.Rul. 55-4, 1955-1 Cum.Bull. 291 ("A taxpayer who gives his
services gratuitously to an association, contributions to which are
deductible under [§ 170] and who incurs unreimbursed traveling
expenses . . . may deduct the amount of such unreimbursed expenses
in computing his net income . . ."). It would strain the language
of the regulation to read it, as petitioners suggest, as allowing a
deduction for expenses made incident to a third party's rendition
of services, rather than to the taxpayer's own contribution of
services. Similarly, the taxpayer is clearly intended to be the
subject of the other provisions in the regulation. For example, it
is most natural to read the regulation as referring to a taxpayer
who incurs
Page 495 U. S. 488
expenditures for meals and lodging while away from his home, not
while a third party is away from his home.
Petitioners' interpretation not only strains the language of the
statute, but would also allow manipulation of § 1.170A-1(g) for tax
evasion purposes.
See Note, Does Charity Begin at Home?
The Tax Status of a Payment to an Individual as a Charitable
Deduction, 83 Mich.L.Rev. 1428, 1434-1435 (1985);
Brinley v.
Commissioner, 782 F.2d at 1338 (Hill, J. dissenting). For
example, parents might be tempted to transfer funds to their
children in amounts greater than needed to reimburse reasonable
expenses incurred in donating services to a charity. Parents and
children might attempt to claim a deduction for the same
expenditure. Controlling such abuses would place a heavy
administrative burden on the Service, which would not only have to
monitor the taxpayer's records, but also correlate them with the
records of the third party. To the extent petitioners'
interpretation lessens the likelihood that claimed charitable
contributions actually served a charitable purpose, it is
inconsistent with § 170.
Petitioners cite judicial decisions that allowed taxpayers to
claim deductions for the expenses of third parties who assisted the
taxpayers in rendering services to qualified organizations.
See, e.g., Rockefeller v. Commissioner, 676 F.2d 35 (CA2
1982);
McCollum v. Commissioner, 37 TCM 1817 (1978);
Smith v. Commissioner, 60 T.C. 988 (1973). These cases are
inapposite, as petitioners do not claim that they were
independently rendering services to the Church, assisted by their
sons.
We conclude that § 1.170A-1(g) does not allow taxpayers to claim
a deduction for expenses not incurred in connection with the
taxpayers' own rendition of services to a qualified organization.
Therefore, petitioners are not entitled to a deduction under §
1.170A-1(g).
Petitioners also assert that, because their sons are agents of
the Church authorized to receive payments to support their
Page 495 U. S. 489
own missionary efforts, payments made to their sons are payments
to the Church. Because this argument was neither raised before nor
decided by the Court of Appeals, we decline to address it here.
See, e.g., Delta Air Lines, Inc. v. August, 450 U.
S. 346,
450 U. S. 362
(1981);
United States v. Mendenhall, 446 U.
S. 544,
446 U. S.
551-552, n. 5 (1980).
Accordingly, we hold that petitioners' transfer of funds into
their sons' accounts was not a contribution "to or for the use of"
the Church for purposes of § 170. The judgment of the Court of
Appeals is
Affirmed.
|
495
U.S. 472|
* The Commissioner has adopted the holding in
Rockefeller v.
Commissioner, 676 F.2d 35, 42 (CA2 1982), that unreimbursed
expenses are contributions "to" the Church, rather than "for the
use of" the Church.
See Rev.Rul. 84-61, 1984-1 Cum.Bull.
40.